It's either I don't blog for some time or I have some many things to write about. One national issue that occupied the minds of those who bothered was the announcement by the government on our CPF. There were basically two prominent issues - the planned increase in draw-down age and the compulsory longevity insurance.
The current draw-down age, the age at which CPF Minimum Sum funds may be withdrawn in monthly instalments, is 62 years. The government estimated that the payouts from the CPF will run out before they are 82 for many Singaporeans. This is why Singaporeans are encouraged to work as long as they can and withdraw their savings later. This draw-down age would slowly be raised to 63 in 2012, 64 in 2015 and 65 in 2018.
A lot of people are skeptical about this, especially the older people. They think that the government is not sensible by raising the draw-down age. It's their own money for Christ sake! Some even think that the government increased the draw-down age so that they can continue to use our money to invest in some other areas. If that's what some elders think, I guess it's understandable. My colleague, Patrick, who is as old as me, also agrees with the conspiracy theory. Oh come on!
No doubt many would say the government is "KPO" - a lot of them would just say "I know how to take care of myself" - but these are also the same people that would complain that the government never take care of them when they are old and penniless. So the government, in a way, pre-empts this and take care of us when we grow old through our CPF. It really is a good scheme. You just need to appreciate it.
The longevity insurance came about because the government believes (of course, research was done) that Singaporeans are living much longer than before (Funny. With all the junk food and the rising pollution, it is indeed a surprise). Thus the longevity insurance. Initial plan is to be compulsory for those who are currently 50 and below. It would require them to use a small part of their Retirement Account to purchase longevity insurance when they are 55 years. It is suppose to give the member a monthly income from a pre-determined age (looking at 85 years) and for as long as he lives.
Again, controversy. People are saying "Walau! I won't live that long la. You see hah. I buy at 55 years old and suay suay I die at 84 leh? Bo hua ma!" Patrick also mentioned that in order to benefit from this (Sidetrack a bit. Patrick cannot be taken advantage of. Everything must have a ROI, then he will do. That's why I don't really like him.), he must live more than 85 years, perhaps even more than 90 years to fully reap the rewards. Patrick mentioned he won't be that lucky to live that long. I only said "What if you heng heng live up to 100? Let's take it that your CPF savings by 85 years already paid out and you have no savings. So how are you going to survive the remaining 15 years?" He turned silent.
Thing is, people are short-sighted. Look far, people. I know the day when you die is not predictable but isn't it too late, when you start preparing for it when you realise that you are going to live much longer? It is simply not possible that one could pay as little as $4,000-plus (initial proposed amount) when he is 85 years, just because he knows he is going to live past 85 years, and then hope to be paid a monthly income of $400 for the rest of his remaining years. If you know of one, please feedback to the MOM because I certainly do not know of one insurance company that will do just that.
But one thing that maybe MOM can review is the age to purchase. It is now pegged at 55 years, which I think it's too early. Maybe an age of 60 years or 62 years, a few years before the draw-down age, would be a better option.
In short, these announcements are really not as bad as most people think. This reform must be communicated clearly to the public to let them understand the benefits, even though it might take some time.
