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Singapore PM outlines Central Provident Fund options for retirement
Publication Date : 18-08-2014
Singapore's fast-rising number of elderly people can look forward to several changes aimed at ensuring they will have enough to live on during their retirement years.
Addressing the nation at his 11th National Day Rally on Sunday night, prime minister Lee Hsien Loong announced that a new scheme, called Silver Support, will be set up to give lower-income Singaporeans with little or no Central Provident Fund (CPF) savings an annual bonus from the government. The details will be announced later.
Another change: CPF members who are retired, that is 65 and over, will be allowed to withdraw a lump sum from their Minimum Sum savings if they need.
But there will be a limit, perhaps 20 per cent, to ensure they receive monthly payments throughout their later years.
Lee also disclosed that the Housing Board's Lease Buyback Scheme, which allows owners of three-room flats and smaller units to sell a part of their 99-year lease to the government in return for a regular income, will be extended to four-room flat owners as well.
That means more than half of all flat owners can use their homes to ensure an income this way.
Lee said home ownership and the CPF scheme - Singapore's twin pillars for ensuring that people have enough for retirement - will be improved to better support the poor and be made more flexible for all.An advisory panel will study these issues and more.
"We will give you greater assurance and more options in retirement," Lee said.
The retirement needs of Singaporeans took up a good part of his address, delivered for the second year running at the Institute of Technical Education (ITE) College Central campus in Ang Mo Kio.
He also focused on the pioneer generation, highlighting several remarkable individuals. Among them was Singapore's first president, the late Yusof Ishak, who will be honoured by having a mosque, research centre and university professorship named after him.
And he dwelt at length on upcoming changes to polytechnic and ITE education, showcasing several successful people without degrees to emphasise there are many pathways to the top for those prepared to work hard and upgrade as they go.
Lee quipped that he was playing financial planner this year as he moved on to the issue on many minds: whether people have enough savings for their old age.
He acknowledged the concerns sparked by the increase in the CPF Minimum Sum to S$155,000 (US$124,463) for those turning 55 this year.
But while he announced that CPF members will be allowed to take out a lump sum, he stressed that the Minimum Sum Scheme will stay.
"If you take out a lump sum, then you will have less left in the CPF, and your monthly payments will be smaller too," he said.
He also revealed that the Minimum Sum will be raised to S$161,000 (US$128,281) for those turning 55 next July. He said he did not see a need for further major increases.
But other changes could be in store for the CPF system, as the advisory panel to be set up by the Ministry of Manpower will study a range of issues, such as how the Minimum Sum should be adjusted over time to provide an adequate basic retirement payout, or how CPF savings can be invested more widely.
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