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SINGAPORE: A new committee will be set up to study the National Longevity Insurance Scheme, which is better known as "annuity".
Manpower Minister Dr Ng Eng Hen said in Parliament that this committee will be chaired by National Wages Council Chairman Professor Lim Pin, and members will include academics, grassroots leaders, unions and non-governmental organisations.
The committee is expected to come up with a report in six months.
Dr Ng said longevity insurance is the cheapest way to ensure that Singaporeans do not run out of savings prematurely, so the government wants to put into place a national scheme that provides basic longevity protection for CPF members.
He said, "When you buy a longevity insurance, which is a deferred annuity, you will receive a monthly income from a pre-determined age... for as long as you live."
"It is right to require CPF members to make financial provision for the eventuality that they live longer than expected. By then, they certainly will not be able to work and may have no family members to depend on. This is the basic goal in devising a national longevity insurance scheme."
So the government will require CPF members to take up some form of annuity, or longevity insurance scheme, by using a small part of their retirement account.
Premiums will be adjusted according to risks. For instance, women may have a higher premium as they tend to live longer than men.
The manpower minister believed that the extra interest payments Singaporeans receive under the new CPF scheme, in which a one percentage point additional bonus interest will be paid on the first S$60,000, will be more than enough to pay for the longevity insurance.
"We have received many suggestions from members of the public on various options that are more suited to their needs. Some younger members want to participate in annuity schemes because it is cheaper to come in early. Some who are older also want to be included because they have no dependants and their savings are for themselves only. We should be flexible in accommodating the different circumstances of CPF members, and offer different ways to provide for their full life expectancies," he said.
Dr Ng also stressed that longevity insurance is the missing critical piece that Singapore now puts into place to further strengthen the CPF system.
He said by plugging this gap in the system, it will bring security to many Singaporeans who will reach their golden years. - CNA/ac
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