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Singapore

Silver Housing Bonus "impractical": Lina Chiam

Non-Constituency Member of Parliament, Lina Chiam questioned the use of the Silver Housing Bonus, calling it "impractical" from a financial perspective.

Silver Housing Bonus "impractical": Lina Chiam

File photo: Mrs Lina Chiam

SINGAPORE: Non-Constituency Member of Parliament, Lina Chiam questioned the use of the Silver Housing Bonus, calling it "impractical" from a financial perspective.

To better provide for retirement needs, she suggested that retirement funds be pegged to the inflation index.

This could take the form of an inflation-protected scheme pegged to forecasted inflation.

She said the government should also consider reducing the amount of proceeds from the sale of homes that have to go into CPF accounts.

"Firstly, a homeowner will forgo a significant sum of sales proceeds for future consumption through the CPF Life Annuity. For a Singaporean who has short-term liquidity needs, this scheme does not help. Moreover for retirees, they do not enjoy lower property tax even though they no longer draw a salary," said Mrs Chiam.

"Secondly, for other homeowners, this sum that goes into the CPF is not automatically adjusted for inflation. If a Singaporean takes up the scheme without a long-term perspective, the real value of his money in his CPF account might diminish with inflation," she said.

In contrast Zaqy Mohamad, MP for Chua Chu Kang GRC, described the Silver Housing Bonus a good move.

The $20,000 bonus is given to elderly households who downgrade from a bigger flat to a three-room or smaller flat.

But Mr Zaqy pointed out that many elderly who own HDB flats are less willing to uproot themselves and downgrade to a smaller flat.

Instead, he said the Lease Buyback Scheme - which involves selling the tail end of a flat's lease back to the Housing Board - is a more rational alternative.

Noting the low adoption rate so far, Mr Zaqy called on the government to expand the eligibility criteria for the scheme.

Mr Zaqy said: "The scheme should be made available for older Singaporeans in larger flats to monetise their needs. The existing position that larger flat owners can downgrade to monetise their assets involve high risks in market cycles and cash transactions.

"The lease buyback scheme is a safer, more rational alternative.The adoption of the lease buyback scheme may also be better among the middle-income population as the amounts monetised from larger flats are likely to be higher, and the education profile of the flat owners may mean they are better to appreciate how the schemes will benefit them."

Source: CNA/cc/de

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