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SINGAPORE : The government may make buying annuity compulsory, said Mr Lim Boon Heng, Minister-in-Charge of ageing issues.
Speaking to reporters after a National Day Observance ceremony at the Mitsuboshi Overseas Headquarters on Tuesday, Mr Lim said the government is looking to build the annuity component into Singapore's plan for the ageing population.
With longer life expectancy, Singaporeans will have to work longer, beyond the present retirement age of 62.
The government is considering a law on re-employment, to get employers to guarantee their employees a job once they reach 62.
But it may not necessarily be the same job or the same salary.
Mr Lim urged employers and employees to start preparing for the re-employment law as soon as possible.
This is because the law would provide only a framework and not spell out how re-employment should be done.
Besides working longer, another way to prepare for old age is to have a form of insurance that caters to a longer lifespan.
And one way to do this is by buying an annuity.
Said Mr Lim: "If you have a full minimum sum in CPF, when you withdraw the CPF, CPF will pay you $700 over a month. But it's for 20 years. At the end of 20 years, you'll have nothing to withdraw.
"If you buy an annuity, the insurance company will pay you less - $500 a month. But the insurance company will have to pay you for as long as you live. And if you live to 100 (years old), they'll have to continue paying you till you're 100. Therefore it's a lesser monthly sum but you're insured a little longer.
"We may have to make it compulsory for everyone, but I think for now, we should explain to people what annuities are and how people can benefit, to get people to understand it." - CNA /ls
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