Fancy a 'lifelong income scam'?
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Fancy a 'lifelong income scam'?
Loh Chee Kong
WHAT was floated as a risk-pooling annuity — which families will not get back if members fail to live beyond 85 years — could now turn out to be a refundable "lifelong income scheme" that starts dishing out monthly payments to members from the age of 80.
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The reasons? Singaporeans do not want their money to fall into others' hands, and they do not believe they will live until 85.
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Even the proposal's original title, "National Longevity Insurance Scheme", has gone out the window, to be replaced by what will now be known as the "National Lifelong Income Scheme" — and subject to the Government's green light, it will be managed by the Central Provident Fund (CPF) Board.
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Professor Lim Pin, who chairs the committee tasked to craft the nuts and bolts of the plan, said: "The title, 'longevity insurance", does not give a positive connotation of longevity, right? If you die early, you'll lose out. Now, we've thought out a new name … Who doesn't want a lifelong income?"
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He was speaking to journalists on Wednesday, in offering a sneak peek into his committee's recommendations submitted to the Government. The full recommendations will be unveiled on Feb 12, just ahead of Budget Day.
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After more than four months of formal feedback gathering from some 600 people — on an emotive policy the Government acknowledges is a tough-sell to the masses — Prof Lim said two main issues stuck out.
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One is the scepticism that one in two Singaporeans would live beyond 85, the hard statistics notwithstanding. Prof Lim said lowering the starting point for payouts to a "compromise" age of 80 would make it "easier" for people to accept the scheme.
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He also noted, experts have also found "no robust data" to support the perception that the rich live longer and thus, should pay higher premiums.
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Currently, CPF members can depend on payouts from their Minimum Sum until they reach 85. But should the Government accept the suggestion to allow annuity payouts from age 80, Singaporeans hitting 55 could choose the age at which they actually want to start receiving the monthly annuity payments, said Prof Lim.
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Those already above 55 when the change kicks in would be allowed to opt in, but at a higher premium.
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The second issue involved calls for refunds to be paid to the next-of-kin, should members die before reaching 85. "Refundability was a very important point," said Prof Lim, attributing this to the "Asian culture that you have to leave something for your family".
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Without going into details, Prof Lim gave the assurance that families could get back the capital sum in the event of an early death. And should the member choose to forego the refund option, they could get a larger monthly payout.
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Currently, some insurers offer refunds in their annuity schemes. For example, an NTUC Income customer can choose a "capital protected annuity" where the balance of the capital sum, minus monthly payments, is refunded to the next-of-kin should he die early. Only the interest earned is then left behind in the pool.
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For the national scheme to provide a full refund, former chief executive of NTUC Income Tan Kin Lian estimated that the cost "will increase by 30 to 50 per cent".
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Nominated MP Kalyani Mehta said it would be "reassuring" to Singaporeans for CPF to run the scheme, and "lowering the age to 80 would give people a better chance of enjoying the payouts".
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But Society of Financial Services Professionals president Leong Sze Hian felt the recommended tweaks to the annuities plan did not address his basic worry: Whether the national scheme, given the more attractive annuity products on the market that the better-off can afford, would end up serving "a pool of poor people".
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Pointing out how previous CPF plans, such as the Dependant and Home protection schemes, ended up being privatised or as poor cousins of financial products on the market, Mr Leong suggested the Government directly aid this group, who "already don't have much money in their CPF account in the first place".
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Associate Professor Mehta concurred that she could "see the lower middle-income group struggling to get involved" and "how they can be facilitated to be part of the annuity plan is the biggest challenge ahead".
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Inflation is another worry, said Mr Tan: "Many people consider the payout of $300 to be inadequate for today's cost of living. In 30 years' time, this sum will be so much smaller to serve the needs of the elderly at that time."
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Still, Prof Lim had little doubt the public would be receptive. "Initially, there was unhappiness: the Government taking my money to do something else, things like that … all sorts of wild talk. Now we are saying we are ensuring you a lifelong income — that's a very big undertaking." -
The original idea was so bad it seemed anything would be an improvement.
However as there isn't much information out of this one, I'd reserve my opinion on that.
It's good to see that the government working on this.
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first, i give you a rotten apple, you complain.
next, i give you a half rotten apple, you are very happy over the vast improvement.
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you will never know once this scheme is in operation, the retain amount will just be ever increasing.
they did promise GST to be 3% and within a short years, it 7% now. god knows what's next
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... all I see, is a very elaborate ILLUSION...
... coz I know in the end, they will change things yet again, & you won't get much or anything back after a lifetime of hard work, belt-tightening, "Biting Bullets", and swallowing "Bitter Pills"...
.... and all the time, they are fattening their own bank accounts with Salary Hikes, pathing thier own existence with money and glory for providing a nation of people, with Lives of Frugality....
.... this is NOT a government as I have pointed out countless times, these are businessmen out to make your every dollar... !
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they will implement now with what ever policy to get all the people in, in a couple more years, any reason/statistics will be made into some driving force to change the policy to the original one that the government wanted to implement in the first place.
Isn't that the case with CPF.. -
no matter what they call it, it's still an insurance scheme for the government to take care of the welfare of the long-lived.
according to the statistics department, the life expectancy of man and woman are 78 and 81 respectively.
http://www.singstat.gov.sg/stats/keyind.html
based on the insurance principle of risk spreading, 90% of the insured have to pay for the 10% that actually benefited from the scheme.
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Wah lan... always like that... a poll of 600 of their people does not represent the whole community. Why not a national poll on such matter? I will see more than 70% anti votes for such stupid scam to be implemented.
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I don't trust statistics.
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I don't trust statistics.
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... long lives???
... those who are now in their 80s, are from tge earlier generations - the Nation Builders, who were never exposed to fast foods, hectic and stressful lifestyles, etc.
... how can the stupid stat department based on these earlier generations? Don't we all read of perfectly healthy young individuals of late, dropping dead for no apparent reasons?
... the younger generations are the ones with SHORTER life expectancy living under this FAP's regime...
... hence, this so called Lifelong Income Scam will ensure, they NEVER get to see their money...
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Originally posted by caleb_chiang:
Wah lan... always like that... a poll of 600 of their people does not represent the whole community. Why not a national poll on such matter? I will see more than 70% anti votes for such stupid scam to be implemented.
It is just pure propaganda. To turn it to their favour, they always publish or release info that benefit them. I don't trust all their stats and so on. Just like lee hsien loong eats mee siam mai hum does not mean we all also eat mee siam mai hum. ha haha, by the way there is no such thing as mee siam without "hum"
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Originally posted by qlqq9:
It is just pure propaganda. To turn it to their favour, they always publish or release info that benefit them. I don't trust all their stats and so on. Just like lee hsien loong eats mee siam mai hum does not mean we all also eat mee siam mai hum. ha haha, by the way there is no such thing as mee siam without "hum"
... for the hell of it, should try buying some Mee Siam home, and then add some freshly cooked Cockles in it and see how it taste...
... probably just as bad as his policies....
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... here's more minced reportage....
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Independent surveys confirm S'poreans living longer
WHEN Singaporeans were told that more than half of those who live to age 62 will live beyond 85, many raised their eyebrows in disbelief.But independent actuaries from American company Trowbridge Deloitte have 'more than verified' this data, with studies that show Singaporeans are indeed living longer.
Separate surveys also indicate there was 'no robust data' to conclude the rich live longer than the poor - and thus stand to gain more from a compulsory annuity plan Singapore will be introducing for old-age support.
These two outcomes were made public on Wednesday by Professor Lim Pin, who chairs a committee that had commissioned the studies to address the scepticism among some Singaporeans of the need for the annuity plan.
He made the disclosures when he gave the media a preview of the shape of the upcoming annuity plan. His 18-member, government-appointed committee is tasked to draw up a basic annuity scheme for Singaporeans.
In estimating a life table for annuity participants, Trowbridge Deloitte's calculations support government data that Singaporeans are living longer, he said.
More details will be revealed on Feb 12 when Prof Lim's committee makes public its report.
Last year, when the Government announced plans for mandatory annuities, it explained they were necessary because many are living beyond 85 years and they need to have money then.
Some Singaporeans doubt it. Also, they feel the poor will end up subsidising the rich, who may live longer because they can afford better health care.
To settle the issue, the actuarists were asked to do a survey. 'And they came to us saying that so far, no robust data supports that difference - not robust enough to have any differentiation (in premiums),'' said Prof Lim.
'So what we will recommend is perhaps, we'll keep an eye on that. If indeed... there is robust data, we have to modify the scheme,'' he added.
The committee also sought people's views. One such person is wealth management consultant Arul Selvam Govindasamy, 35, a member of national feedback group Reach.
He suggested making the premiums refundable. 'With our stressful lifestyles and the unhealthy food we consume, I think our generation will not live as long as the current elderly,' he said.
The idea was among five key recommendations made by the committee. NTUC has endorsed them, said Prof Lim.
When contacted, NTUC deputy secretary-general Halimah Yacob described the recommendations as 'positive' and 'sound'.
Particularly pleased with the refundable option, she said: 'Many Singaporeans hope to leave something for their families when they pass away, and the new proposal addresses that concern.'
Union leader Lim Kuang Beng, while supporting the plan, called for greater attention to be paid to non-CPF contributors who will be left out. 'Often, they are the ones who need most help in their retirement,' he said.
Feeling the same way, Mr Leong Sze Hian, president of the Society of Financial Service Professionals, said the well-off will buy their own pension plans.
This leaves the risk-pooling in the planned annuity to a smaller and poorer group of Singaporeans, and will jack up premiums, he said.
Manager David Cheong, 37, like many of the seven interviewed, find the recommendations are 'a slight improvement on the scheme'.
'At the end of the day, I believe people should be given the freedom to do what they want with their money, rather than have it tied down.'
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Then the expected 70 million increase in taxes from ERP go where? Why cannot use to help the old?
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Originally posted by eagle:
Then the expected 70 million increase in taxes from ERP go where? Why cannot use to help the old?
... oh, that one is probably used to help their Salary Hikes... -
It looks like some here don't believe that on average, Singaporeans will live very long. I also dunno. Maybe with modern stress of life, our life expectancy start to decrease.
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when pension scheme was first created, they expect people to live to about 65 years old because that is about the time when most people will die.
And if you look at the statistic, pensioners are actually living longer every 4 to 5 years and that is why many european pension schemes are now in the mist of collapsing.
If you think what MM Lee said is crap, I would urge you to dig into statistic and proof otherwise.
And please do not use isolated case to justify your argument.
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nuff said, guess most well to do will migrate by the age of 62 to avoid the scheme if there's no opt out
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Good for people who live long.... singaporeans not confident to live that long? Unhealthy lifestyle the main cause? Mostly scared ba...
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This smells worse than sh|t...
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Lifelong income committee to release report on Tuesday
By S Ramesh, Channel NewsAsia | Posted: 11 February 2008 1449 hrs
SINGAPORE: Details of a national scheme to provide lifelong income to Singaporeans to see them through their old age will be released on Tuesday.The committee, set up to study the National Longevity Insurance Scheme, is headed by Professor Lim Pin.
Over the past two weeks, both Prof Lim and Manpower Minister Ng Eng Hen have given an insight into some of the committee's recommendations, among them is a new name for the concept – 'National Lifelong Income Scheme'.
According to a UN study, Singaporeans have a life expectancy of 80 years while the global average is only 67 years.
And it is estimated that by the year 2030, 900,000 Singaporeans will be above 65 years old.
Zulkifli Baharudin, member of the National Longevity Insurance Committee, said: "Not many people have thought about it but when you sit down and really discuss in a detailed manner, most people do have their concerns. They want to make sure that they live a meaningful life.
"People have concerns about their ability to live independent lives, the ability to continue to have whatever income they have for the rest of their lives, (along with the) understanding that some of the family support structures may not be as strong as what they were in the past."
Hence, there is a need to ensure that Singaporeans have enough savings to see them through their lifetime.
Prime Minister Lee Hsien Loong announced plans to help Singaporeans work longer and have more for their retirement in his National Day Rally Speech last year.
He also revealed that the government would make some form of annuity compulsory for CPF members.
A month later, the National Longevity Insurance Committee was set up. Its mandate is to design a national scheme that would be basic, affordable and fair to provide Singaporeans income for life from their CPF savings.
The committee consulted nearly 600 Singaporeans from all walks of life for their views on how the scheme can help address the challenges of an ageing population.
Denise Phua, MP and member, GPC for Manpower, said: "Most Singaporeans are very low in financial literacy. It is important for them to know – whether they are in the average income, high income or low income (groups) – how much they would need till the day they pass on. The Lifelong Income Scheme is a very good start-up for them."
Observers said one of the challenges in operating the National Lifelong Income Scheme pertains to letting Singaporeans have the option of choosing the age at which they would want to start receiving the payouts.
Among the recommendations that have come out so far is to start the payouts at the age of 80.
Dr Ng announced earlier this month that the scheme would kick in by 2013 and he said about 60 percent of active CPF members will get at least S$600 per month for life under the scheme.
"I hope the committee could give people a lot of hope for the future... (they could) predetermine what they want to have as a meaningful standard of living in the future," said Mr Zulkifli.
There is, however, the concern that some Singaporeans still stand the risk of being excluded.
Ms Phua said: "Some of them may not have the minimum sum in the CPF, and I truly hope that the government and other helping hands would be able to creatively stitch some solutions to help them to be included in the National Lifelong Income Scheme."
The committee has also proposed that the CPF Board administers the scheme.
- CNA/so -
... hallo... "nearly" 600 people from ALL walks of life...
... hahahahaarrrrraahahahahaaaaaaa....
.................. bull .......
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http://theonlinecitizen.com/2007/08/29/are-there-systemic-problems-in-our-cpf-system/
Are there systemic problems in our CPF system?
Posted by theonlinecitizen on August 29, 2007By Leong Sze Hian
I refer to the article “Flexible, basic and cheap annuity scheme” (Today, Aug 27).Instead of spending the $750 million a year to pay the additional 1 per cent interest on the first $20,000 of the CPF Ordinary Account, and $40,000 of the Special, Medisave and Retirement accounts, growing these sums at say 5 per cent interest will accumulate to $67.7 billion in 2042 (the first year that the compulsory annuity will start at age 85, for those who are below 50 years old now).
This amount can at 5 per cent interest provide $300 a month from age 85 to 100, for 1.79 million Singaporeans.
By age 100, about 99.9 per cent would have died.
In fact, as many will die as they grow older, beyond age 85, more than 1.79 million people can receive the $300 life annuity.Even if the resident population grows at 3 per cent per annum for the next 35 years, will there be 1.79 million or more Singaporeans over age 85 in 2042?
According to the Cremation Association of North America (link), the life expectancy for “White (race) Both Sexes”, at birth, age 55, 65 and 85, is 77.7, 26.2, 18.2 and 6.4 years, respectively.
In other words, the 50 per cent survival probability for someone at birth is 77.7 years, and someone who is age 85 has a 50 per cent chance to be alive at age 91.4.
Therefore, under the proposed deduction of the compulsory annuity premiums at age 55, the percentage still living at age 85 may be less than the stated 50 per cent, because the 50 per cent probability would have been reached at age 81.2 for this cohort.
Only the age 70 cohort has an almost 50 per cent probability level of survival of 14.7 year, at age 84.5.
It was reported in Parliament on 27 August (“Minimum Sum : Figures show many don’t meet the mark”, Straits Times, 28 August), that :
“Only one-third of CPF members who turned 62 last year met their Minimum Sum (MS) requirement when they reached the age of 55 in 1999. Manpower Minister Ng Eng Han said that of the 22,600 CPF members who turned 62, 7,600 - or 34 per cent - were able to meet their MS, which in 1999 was set at $ 60,000. The remaining 15,000 members who did not meet the MS had a median shortfall of $ 49,300”.
Does this mean that despite the 4 per cent accumulation, and new CPF contributions for those who were working beyond age 55, 66 per cent could not meet the $ 60,000 MS, and 33 per cent had less than $ 10,700 at age 62 ?
“He (Manpower Minister) noted that one important reason why many members fell short of the MS is the current rule letting them withdraw half of their CPF savings at age 55”.
Phasing out “the current rule letting them withdraw half of their CPF savings at age 55”, delaying the MS monthly payouts to 65, and the compulsory deferred to age 85 life annuity purchase, may just be reactive ad-hoc measures, to address a fundamental core problem.
Are there systemic problems in our CPF system ?
Are HDB flats priced such that they are eating up too much of the average Singaporean’s CPF ?
Are there too many Singaporeans who lose their CPF life savings, when their HDB flats are foreclosed ?
Are we paying too low an interest rate on CPF ?
Why is it that according to the AXA Global Retirement Study, Singaporeans are the highest savers in the world, but have the lowest income in retirement ?
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Nat'l life insurance scheme to be fair and flexible
Imelda Saad
Tue, Feb 12, 2008
The Straits Times
THE National Longevity Insurance Committee has submitted its full report to the Government outlining a life-long insurance scheme that's said to be 'fair and flexible'.Called CPF Life, the scheme is to be administered by the CPF Board.
Those directly affected will be the first cohort of CPF members to go on the scheme that will kick off in 2013. These will be members who turn 50 this year and will be 55 years old when the scheme is launched.
This group of CPF members will be automatically covered under the longevity insurance scheme that'll ensure they receive cash payouts for the entire duration of their lives, upon retirement.Currently, under the Minimum Sum scheme, members get monthly payouts for only 20 years, from age 65.
This is inadequate says the Government, because Singaporeans are living longer.
For those not automatically covered by CPF Life, such as those aged 56 and above in 2013 and those with insufficient cash in their Minimum Sum, there's an opt-in coverage.
Some groups are exempted from the scheme. These include those who are physically or mentally incapacitated and those who receive a pension, annuity or other benefit equivalent to the longevity insurance scheme.
Manpower Minister Ng Heng Hen is expected to announce an incentive scheme on Wednesday, to encourage more to opt-into the longevity scheme.
Here's how CPF Life works :
When participants join the scheme at age 55, their Minimum Sum (MS) cash balances will be split into two parts - a larger part that remains in the Retirement Account (RA) and a smaller part, called the Refundable Premium (RP).The RP is where money will be drawn down and paid out to a CPF member each month for as long as he lives.
To ensure the scheme's flexible, participants can choose when their Longevity insurance starts.
That is, they can choose for the payouts to start either at age 65, 70, 75, 80, 85 or 90. If they do not do so, they will be placed into the default 'Refund 80' plan with the payout starting at age 80.
The committee says the earlier the longevity insurance starts, the higher the payout.
And to address concerns that hard earned savings will be lost, should a member die before their longevity insurance starts, the committee has proposed a 'refund' feature.
This means the CPF Life will be fully refunded as monthly insurance payouts to members when they are alive.
When they die, any remaining unpaid amounts will be refunded to their beneficiaries.
This refund feature will also be flexible - members can choose to start their longevity insurance at a later age, which means more money goes to their beneficiaries or opt not to receive any refunds in the event of their early death.
The committee says a member who chooses longevity insurance payouts at the earliest age of 65, with no refunds to their beneficiaries, will enjoy the highest payout per month.
So how much does one stand to gain?
Here's an example :
Under the current scheme, a CPF member in the first co-hort with $67,000 in cash, in his Minimum Sum at age 55 will get $600 for 20 years from age 65.Under the new CPF Life scheme, the same member can expect to get $610 a month, for as long as he lives, given an assumed interest rate of 5 per cent.
Sixty per cent of the 35,000 or so active CPF members in the first cohort are expected to get this amount under the Default 'Refund 80' plan.
That's because they will have at least $67,000 in their Retirement Accounts by age 55.
The committee explains 'the member is able to get as much compared to the old scheme because of the extra 1 per cent on the first $60,000 (in his Minimum Sum) and the benefit of pooling'.
Those with lower cash amounts in their Minimum Sum will receive less monthly payouts.
The proposals were drawn from a six-months-long consultation involving some 600 people.
The CPF Board will launch a public education campaign to explain the new longevity insurance scheme to its members.
The Government has accepted the committee's recommendations and will respond to the proposals on Wednesday.
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well looks like it might get implemented by the year 2013, remember to ask your parents to check the letter box by then. =X