By Zakir Hussain

MORE than 30,000 older CPF members have committed over $1.2 billion to a new annuity scheme since its launch two months ago.

However, these opt-ins to the CPF Life scheme add up to less than 5 per cent of the more than 700,000 Singapore residents aged 55 and older who are eligible to sign up for it.

Asked about the low proportion, Minister of State for Manpower Lee Yi Shyan told reporters yesterday that 30,000 is 'a significant number'' when compared to only about 71,000 private-sector annuities bought by individuals.

He also pointed out that in the pool of 700,000 older CPF members are some who had passed the age of 62. These folk would have started drawing on their CPF savings and may not want to switch to the new CPF Life.

Also, some may have bought their own annuity schemes, he added.

Other reasons he gave are: lack of savings, confidence that they can rely on family members and other sources of retirement income.

Noting that CPF Life is still in its infancy, he said: 'I think we have made a good start.' He expects more people to opt in as they become more aware of it from the increasing outreach efforts.

Mr Lee made these comments when he gave an update on CPF Life on the sidelines of a CPF Board briefing to members turning 62.

The CPF Life scheme was announced last year to help tackle the problem of an ageing population with inadequate retirement savings to keep pace with longer life spans. The new annuity gives a steady income stream for life, instead of 20 years under the current CPF Minimum Sum scheme.

It will apply automatically to those who turn 55 from 2013 with at least $40,000 in their CPF savings.

In the meantime, older CPF members can opt in.

The CPF Board said those who have reached the draw-down age of 62 will receive their first Life payout on Jan 5, and there are about 10,000 of them.

It added that a large number of those who have signed up also qualified for the L and V bonuses totalling more than $60 million. These bonuses of up to $4,000, are to coax the less well-off and older members to opt for the new annuity.

The L-Bonus will be given to around 72 per cent of those who opted in while about 75 per cent will get the V-Bonus.

The Board added that 53 per cent of those who signed up will get both bonuses.

CPF Life consists of four plans with varying monthly incomes and bequests to loved ones.

More than half of those who opt in chose the Life Plus plan, which gives a higher payout and the smallest bequest.

Among them is U Kyaw Zaw, who signed up at a roadshow in Bukit Batok in September and turns 62 next month.

He opted in as the payout of between $570 and $600 that he would receive from January would be similar to the amount from the Minimum Sum scheme.

'I get pocket money if I live past 85, although the trade-off if I do not is that most of the money goes into the pool,' said the financial adviser.

This article was first published in The Straits Times.