More than Marketing is Needed
The simplest and obvious flaw in the annuity scheme, or Longevity Insurance Scheme as the MIW is trying to market it, is that when it is set at 85 as the entry age, only 24,600 people (from 2006 data) would benefit from the supposed $300 per month payout. If it is set at above 80, 56,700 would benefit. At above 70, 194,900 would benefit (about 5% of Singapore’s population). Granted that this Singapore’s demography is expected to be top-heavy by a generation’s time, fundamentally, what is the concern?
The MIW keeps emphasising that an aging population is a worrying development, which is hard to dispute. But if the annuity withdrawal age is set too high, won’t only a minority enjoy the scheme? The higher the age criterion, the fewer the number of people would benefit, making it an ineffective policy. Shouldn’t the scheme benefit as many people as it can without collapsing? Taking care of a retired population, not the smaller population that would live beyond their life expectancy, should be the main concern for the MIW. Hopefully the MIW’s new committee on the annuity, let’s continue to use this word and reject the MIW’s “Longevity Insurance Scheme”, would give concessions on this age criterion, as the first step towards encouraging us that the scheme is a good idea and in our interest. I’m not too optimistic though.
Better marketing of Longevity Insurance Scheme needed: Dr Lily Neo
Posted: 18 September 2007 2059 hrs
SINGAPORE : There is a need for better communication of the CPF changes coming up, and better marketing of the Longevity Insurance Scheme as well.
MP for Jalan Besar Dr Lily Neo made this point when she spoke in Parliament in support of the Ministerial Statement on CPF Reforms on Tuesday.
Dr Neo noted that those who live beyond 85 will benefit from the annuity.
They will also get more than what they initially paid for.
Citing the estimates of some actuaries, Dr Neo said a sum of S$4,300 deducted at the age of 55 from the CPF Minimum Sum, when compounded at 5 percent for 30 years, would yield a payout of S$300 from the age of 85 to 100.
This means that at age 87, one would already have received more than what he or she had paid for.
And at the age of 100, one would expect to get S$54,000 or about 13.5 times of the initial outlay.
Dr Neo added, “It is thus imperative that the Manpower Ministry spares no effort in marketing these proposals well to the general public, to allay general concerns and correct misconceptions. It is crucial to the successful implementation of the policy that we market our diamonds as diamonds and not as graphite.”