THE Government will introduce a special bonus called the LIFE Bonus, or L-Bonus to encourage older CPF members to sign up for the CPF Life annuity scheme.

The sign-on bonus will be given to members when they enrol in the scheme at age 55.

Announcing this in parliament on Friday was Finance Minister Tharman Shanmugaratnam.

Targetted at the lower and middle-income CPF members, the L-Bonus will be given to those whose annual income when they sign on to the LIFE scheme is $54,000 or less.

It will also be given to Singaporeans whose annual assessed property value is $11,000 or less.

This include all HDB flats, said Mr Shanmugaratnam.

Those eligible make up about 80 percent of the cohort aged 50 today, including those whose Minimum Sums are too low for them to be automatically enrolled in the LIFE scheme.

The amount of the L-Bonus will vary such that older and less well-off members will receive more.

For members aged 50 this year, they can expect to receive between $2,200 and $4,000.

A 50-year-old who lives in a five-room flat and earns between $24,000 and $54,000 will receive $2,200.

However, a 50-year-old who lives in a three-room flat and earns less than $24,000 annually will receive $4,000 when he joins the LIFE scheme. If he has $40,000 in his Minimum Sum, this amounts to 10 per cent of his retirement savings.

The youngest eligible cohort - those aged 46 today -will get around 30 per cent of what the 50-year old receives.

The L-Bonus will also be extended to CPF members who are not automatically included in the scheme, added the Minister.

So, anyone with less than $40,000 in their Minimum Sum, but want to take part in the LIFE scheme, will be able to do so, as long as they are willing to make a reasonable contribution to their balances and accept lower monthly payouts.

This is particularly important for many of the women, who may have been housewives or stopped working early and do not have enough in their accounts.

The L-Bonus will encourage their husbands or other family members to top up their accounts so that they can join the scheme.

Older members above the age of 50 who choose to opt into the scheme are also eligible.

They can opt in when they turn 55 years old. But if they have already passed 55 when the scheme is introduced, they will have to opt in within a year from then.

All these older members who choose to opt in will receive the same amount of L-Bonuses as those aged 50 this year.

The Government will set aside $770 million over three years for the L-Bonuses, including $260 million out of the 2008 budget.

Older workers to get Medisave top-ups

TO HELP older Singaporeans pay for their medical bills and their increased MediShield premiums, the Government will top up the Medisave accounts of all those aged 51 and above by up to $450.

This exercise will cost the Government $220 million, said Finance Minister Tharman Shanmugaratnam in his budget speech on Friday.

To encourage employers to provide portable medical benefits through Medisave and MediShield, the Government will also relax the criteria for them to enjoy tax deductions up to the higher cap of two per cent of their wage bill, he added.

Beyond regular Medisave contributions, employers will now be allowed tax deductions up to the higher cap if they make ad-hoc contributions to their employees' Medisave accounts, or if they purchase MediShield or Medisave-approved private integrated plans for their employees.

Mr Tharman added that the Government is also setting aside more funds to help the elderly and needy.

It will top up the ElderCare Fund by $400 million in 2008, bringing its size to $1.5 billion.

The Government will also top up Medifund by $200 million, bringing the fund size to $1.6 billion

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