SINGAPORE - Last Thursday's article ("Emotional barriers to retirement adequacy") gave a few reasons for the unpopularity of the Lease Buyback Scheme.
One is that older flat owners may prefer to bequeath their property to the next generation, for sentimental reasons.
These owners should realise that their children may need to sell the flat anyway if they already own one, since the Housing Board forbids any person from owning more than one HDB unit.
Those who sign up for the Lease Buyback Scheme can still leave behind a bequest for their children, since the proceeds of the lease sale are mostly in the form of a top-up to their Retirement Accounts that are used to buy Central Provident Fund Life plans.
Upon the death of the CPF member, the bequest amount from CPF Life is distributed to their next of kin either through CPF nomination or intestacy laws.
The article also mentioned other options for flat owners to monetise their property, such as subletting and downsizing.
In fact, these are the only options for five-room HDB flat and private property owners. But they are not sustainable in the long term as they create downward pressure on the rental market and property prices, given Singapore's ageing population and shrinking working population.
Many Singaporeans are asset-rich but cash-poor ("Asset-rich, cash-poor retirees speak up"; Nov 30, 2013), and if the Government extends assistance to these asset-rich millionaires, it would translate to an undue burden on the working population.
There is an urgent need to solve this asset-rich, cash-poor imbalance at the government and individual levels.
This article was first published on September 2, 2014.
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