In principle, does the National Lifelong Income scheme address the needs of our ageing population? What more can be done to make the scheme even better?
Darren Thomson
President & CEO
Manulife
THE National Lifelong Income scheme provides a longevity safety net for Singaporeans. The scheme has options and choices to suit individual needs. It's good that exemption is given to those who already have an annuity plan in place, so as to avoid overstretching their resources. The following two areas are for enhancement consideration. Obviously, we need to bear in mind that there will be a trade-off of benefits with the additional features.
(1) Advance payment - A person with terminal illness should be allowed to exit the scheme at any time and advance all the benefits as there is no longer a need to guard against longevity and the advanced payments will go towards his healthcare needs.
(2) Inflation risk - It should be taken into consideration and adjust the interest rate to match inflation rate. This is to ensure that the purchasing power is not eroded. Thus, one will not need to compromise his living standard due to inflation.
Lim Soon Hock
Managing Director
PLAN-B ICAG Pte Ltd
THE National Lifelong Income scheme should not be seen in isolation from other major reforms: higher interest rates on CPF savings, enhanced Workfare Income Supplement for mature workers, MediCare, MediShield and the proposed means testing, which are all designed as integral parts of a holistic framework to better prepare all Singaporeans for retirement and old age.
I am pleased that the latest proposal on the National Lifelong Income scheme takes into account two key concerns of the man in the street - a flexible payout period and a refund of premiums in case of early death.
The ideal scheme would be one that involves a minimum premium for maximum payout for life. While the scheme itself may not meet this objective, it can when considered against other steps which our government can take, and current initiatives which are in place.
While the scheme is now more palatable and with premiums being paid out from the CPF Minimum Sum, the challenge is to determine the quantum of payouts that will be sufficient to sustain living for life and at what premium. Given that this is a matter of great interest to policyholders, it is important to engage the public, if it has not already been done.
During good years, perhaps our government could consider giving out top-ups for the CPF Minimum Sum as a subsidy for premium payouts and to maximise this reserve for the man in the street.
No such scheme on its own will completely address the needs of everyone but I am confident our government will do the necessary to help those in dire need as well as cater to the needs of our ageing population.
Fong Loo Fern
Managing Director
CYC The Custom Shop Pte Ltd
THE National Lifelong Income scheme is very comprehensive and seems like a great instrument to help meet the needs of the ageing population. I like the flexibilities offered by the scheme and I congratulate the committee for listening to the feedback from the ground. My only concern is how the government will provide help for those who are not able to achieve the minimum sum. Of particular concern are those who do not have children and singles with low paying jobs.
Teng Yeow Heng Michael
Managing Director
TR Formac Pte Ltd
IT is heartening to learn that the National Lifelong Income scheme has gone through a thorough review and many people were consulted this time. However, I hope that the committee will review the following:
1. The crux of the problem is that most of us will not have enough for our retirement. Therefore, no matter how we package the scheme, the amount is not going to be enough to take care of our retirement. Can the government agency through the CPF give us better returns for our funds so that we have more money in our old age? I understand that better returns come with higher risks. However, with the galloping inflation, it is more risky now keeping the funds in safe instruments with low returns than investing in funds with better return but higher risk instruments.
2. With inflation rapidly going north, I cannot imagine what our money will be worth by the time we retire. Can the authorities tell us how the annuity can be protected or sheltered against inflation?
Sam Yap SG
PhD (Entrepreneurship), USA
Group Executive Chairman
Cherie Hearts Group Int'l Pte Ltd
THE National Lifelong Income scheme is a welcome complement to the existing CPF, MediShield and MediSave Schemes - as social safety nets for the people. I have two suggestions, which the committee may like to consider:
1. Given the rising rate of inflation, especially for healthcare and food - basic consumption items for the elderly - the scheme must generate returns that are at least on par with the rate of inflation on these items. Preferably, the scheme should give returns that are 4-5 per cent higher than the inflation rate. In this respect, if the CPF Board, currently having its hands full with managing CPF monies, does not have the resources to guarantee such returns, perhaps the scheme could be outsourced.
2. Allow for flexible withdrawal of monies in the scheme, such as when a policyholder falls critically ill. The money should not be held till his/her death but disbursed earlier to meet his/her immediate needs.
To prevent abuse, such money disbursed should be managed by a government agency rather than given to the policyholder or his/her next-of-kin directly.
Wee Piew
CEO
HG Metal Manufacturing Ltd
WHILE the proposed annuity scheme has the best intentions of providing for the longer lifespan of Singaporeans, it should at best be an opt-out scheme and not be a compulsory scheme. I believe most Singaporeans would still join the scheme if they see its merits. However, the scheme should allow Singaporeans who have sufficient savings or who are able to work after retirement the right to give the scheme a miss.
If the scheme is made optional, the government can encourage Singaporeans to join by making a joint contribution to those who opt to join the scheme.?
Deborah Ho
Chief Executive Officer
DBS Asset Management Ltd
THE National Lifelong Income scheme is a credible way to address the rising life expectancy of our population and their need for financial security in their sunset years. As Singaporeans become better educated and more financially savvy, they would prefer investment options that incorporate income generation and capital preservation when they reach retirement age.
This is where the financial services industry can step in to help Singaporeans diversify their investment portfolios and give them the best returns commensurate to their risk profile. Banking specialists like DBS Group are well placed to help them achieve this.
While the scheme is still in its early stages, I hope future versions will offer greater simplicity in ease of understanding, flexibility in letting people tailor it to meet their personal financial needs, as well as payouts pegged to inflation. With the inevitable shift in socio-economic trends over time, it should also be reviewed periodically to ensure that it continues to serve its original purpose and stakeholders.
Charles Reed
CEO
interTouch
FOR the scheme to be viable over the next few decades, it should address possible economic changes such as rising inflation or slowdowns. For instance, integrating a tied-to-inflation cost adjustment into the scheme will make it more flexible and unequivocal.
More flexibility can also be introduced to the current proposal that, once chosen, the starting payout age cannot be changed. Individuals who have originally applied to receive the payout at a certain age should be allowed to appeal for an earlier payout under exceptional circumstances. This includes those who are forced into retirement by sudden disabilities.
Once the scheme is finalised, it needs to be laid out in clear and simple terms to the general population so that they are aware and understand how the scheme works and how it benefits them. This will generate public discussion and allow constructive feedback that would help fine-tune the scheme in the long run.
Gary Harvey
CEO
ipac Wealth Management Asia
THE future will be one of longer life expectancy; perhaps longer than we anticipate, better health and higher lifestyle expectations for most people's retirement. But this requires higher levels of financial independence than we have today.
The CPF Life initiative is to be commended, but it should not be seen as the only requirement for a happy retirement or as an excuse to relinquish responsibility for funding our retirement needs to the government. Rather it should be the motivation that calls on every individual to bear the responsibility to act on understanding his/her retirement needs and planning for sufficient financial resources.
Issues that need to be seriously taken into account are maintaining your current lifestyle in retirement, inflation and the financial risks of us living longer. That's why I believe now is the critical time for everyone to start retirement planning, if they haven't yet done so.
Glenn Tan
Chief Executive
Motor Image Enterprises
I BELIEVE that the fundamentals of the Lifelong Income scheme are basically sound. But more can be done to educate Singaporeans about managing their finances and saving for old age. We must acknowledge that it is not just the government's responsibility to provide for the elderly. Individuals must take more responsibility.
However, we need help to improve our financial management skills and this is where the government can do more to help. For example, they can work with financial institutions to provide free public talks. Or, they could offer financial education as an optional subject in tertiary institutions. This would benefit younger Singaporeans who are entering the work force to better manage their finances and encourage them to start saving while they are young.
R Theyvendran
Chairman/Managing Director
Stamford Media International Group
YES, to a considerable extent the scheme does address the needs of our ageing population. The security of an uninterrupted Lifelong Income is a fundamental need for a human being to grow up holistically.
If handled with sensitivity and understanding, the scheme would instil a certain psychological confidence and trust. A concurrent scheme should be specially designed and packaged for the poor and low-income who have their own sets of needs and problems.
The scheme should also factor in inflation. The underlying principle should be that the ageing process does not diminish human dignity, whatever else might fade away in time.
Tan Kok Leong
Principal
TKL Consulting
THE goal of the ageing population probably is financial independence beyond retirement and to enjoy a decent life of their own. Globalisation and technology however have changed the world.
They have to worry whether they have saved enough, or whether it will be sufficient. They worry whether their investment will end up in a mess. They are sceptical of experts' help, afraid they may earn excessively. They also worry whether they can get enough growth of their savings funds and whether the retirement scheme could turn underfunded. The National Lifelong Income scheme probably has a good answer to all the problems.
Wee Hee Ling
Managing Director
Commonwealth Travel Service Corporation Pte Ltd
SPECIAL attention should be given to the low-income group who will need this safety net most. This group does not have a big lump sum in their CPF or the know-how to tap on suitable financial instruments. Reaching out to them through appropriate communication channels, educating and helping them to understand the various options available is key.
The scheme can also take into consideration cases beyond the norm, such as those living alone and have no dependants when they retire. With rising living and medical costs, and an ageing population, other avenues to help needy Singaporeans should continue to be explored.
Liu Chunlin
Managing Director
K&C Protective Technologies Pte Ltd
I THINK the change in name itself has helped to set the tone and expectations. While other countries have welfare schemes where citizens become dependent on them, our government has carefully calibrated it to provide the balance of government's help with citizenry responsibility. And it is that balance in the social contract which has to be carefully maintained all the time.
I know the public may want to see more benefit, but it has to come from somewhere. I am one for the government not overdoing it. Have a basic arrangement and leave the rest to the citizens and their extended families. The scheme may try to hold out too much and take away from individual and family responsibilities.
In terms of how wide the net is cast, it may not matter much to the rich as they may see the amount in old age as extra cash which may not impact their lifestyle or something which could be passed down to their children. The safety net will definitely not cover the poor without CPF amounts. That problem will remain.
I guess the government is then trying to catch the large middle group. And for them, the thing that will work is a sustainable, holistic and meaningful lifestyle in old age. The minister mentor has already lent his take by advocating life-long work to keep one active and healthy. More avenues could be created for ordinary older folk to work part-time which could include some voluntary work with allowance, creating a new mindset of seeing this as positive and life-enhancing, encouraging them to enjoy life on the go and keeping fit - till illness or infirmity stops you.
By then one's hope is that the remaining savings, annuity, family goodwill and means plus whatever prevailing healthcare arrangement will be the final personal safety net.
