All this BS about Annuity and of Singaporeans living much longer, up to 82 and above; WHAT proof do they have that EVERYONE lives past 62 or 82? Based on WHAT do they ASSUME people live longer than before?
IN my opinion and observing frequent reports in our newspapers, I think people in this generation and the next, are more prone to dying earlier than the previous generations!
I just feel that the government is just trying to wangle more money out of Singaporeans or simply avoiding or prolonging payouts...
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GOLD FOR THE OLD
More money now or security for life?
By Leong Ching
August 18, 2007 ANNUITIES are little-known cash cows that guarantee a regular payout for the rest of your life, in exchange for money up front.
Alternatively, you can get a monthly payout when you retire at 62 by leaving your money in your CPF, but that is only for 20 years, and not for life.
So, annuities should be better because they won't leave you without an income if you live past the age of 82.
Indeed, the Government may have to make buying annuities compulsory for all as Singaporeans live longer, Mr Lim Boon Heng, Minister in the Prime Minister's Office, was quoted as saying this week.
Yet only 4.1 per cent of CPF members who turned 55 bought annuities with their minimum sum last year.
There is a simple reason for this. The payouts from CPF are much higher.
But suppose the CPF pays you for life, instead of for 20 years.
It may not be able to pay as much each month as it can under its current 20-year payout.
But it should be able to pay much more than the profit-oriented companies that offer annuities.
And that, if it is possible, would be the best option of all.
Take the $99,600 that is now required as the minimum sum in your CPF retirement account. If you buy an annuity with it, you get $400 to $500 a month.
If you leave it with the CPF, you get $790 a month, but only for 20 years.
Mr Tan Kin Lian, former CEO of NTUC Income, reckons there need not be such a large difference between the two.
He estimates that if a life annuity is offered by the CPF, it may be able to make a monthly payout of about $750.
He said: 'As CPF is now paying 4 per cent on the balance in the retirement account, there is no added cost in offering this same investment yield under a CPF-administered life annuity plan.'
And retirees may get almost as much as they do now, but for life and not just for 20 years.
Of course, the key will be to persuade CPF itself to offer the annuity with a high payout.
But even if this happens, there can be other objections to taking up an annuity.
One typical response can go like this: 'I want my family to get any money that remains in my minimum sum after I die. With annuity, they get almost nothing.'
Like insurance, annuities are a gamble on life. For insurance, the payout comes if your life is cut short. For annuities, the reverse is true.
With life insurance, you contribute progressively to a 'pool' from which, when you die, the beneficiaries get the insured amount.
CONTRIBUTE UP FRONT With a life annuity, you contribute the entire amount up front into the pool, which keeps most of the money if you die early, but pays you more the longer you live.
MP Ong Kian Min said: 'I think most people
don't find a life annuity attractive simply because they don't want their descendants or estate to lose the balance of the money not drawn out before their death.
'With the CPF minimum sum, whatever balance that is left upon death passes on to the deceased's estate. People consider this to be their own hard-earned money for them to will away and pass on to whoever they so choose.'
The small death benefit that's offered under some life annuity plans may not be enough for more than funeral expenses.
It's something like a pension.
Mr Ong said: 'When I was in the police force, I heard colleagues lamenting that so-and-so officer retired and passed away soon after, and he and his family did not get to enjoy his hard-earned pension.'
But what if you live to be 100?
'For retirees who live to their ripe old age, it is wonderful,' Mr Ong said. 'Some lose, some gain.'
Mr Tan has a more straightforward reply for those who feel they must keep all their CPF savings to pass on to their children.
'You have other assets, including your property that can be passed to your children,' he said.
'You should invest a certain sum in a life annuity for your own benefit. You have to take care of yourself. This sum does not need to be kept for your children.'