NDR 2014: CPF scheme to be made more flexible to help elderly Singaporeans

NDR 2014: CPF scheme to be made more flexible to help elderly Singaporeans
Prime Minister Lee Hsien Loong said on Sunday during his National Day Rally speech that CPF members will soon be able to make lump sum withdrawals from their CPF accounts after they retire.

SINGAPORE - As Singaporeans age, the Government is trying to ensure that they do so without fretting about money.

For one thing, it is improving the Central Provident Fund (CPF) scheme to make it more flexible, said Prime Minister Lee Hsien Loong in his National Day Rally speech yesterday.

He said that CPF members should be allowed the option to take out part of their savings in a lump sum, if they need to, subject to limits - 20 per cent, for example.

The Minimum Sum that a person has to set aside in his CPF account will also be raised to $161,000 for those turning 55 from July 1 next year but, beyond that, there is no need for any more major increases.

To help the needy, the Government will introduce a scheme for low-income elderly Singaporeans called Silver Support.

And to allow more people to monetise their assets, the Government will extend the Lease Buyback Scheme - which lets the elderly sell part of their flat's lease back to the Housing Board and lets them live in it for the next 30 years - to four-room flats.

While stressing that the CPF will allow members to draw a steady stream of income in old age, Mr Lee noted that he appreciates why some may want to withdraw more money.

This is why the Government will allow a "controlled lump-sum withdrawal" after retirement or when members are aged 65 and above, he said.

"I will adjust the policy...But members must understand clearly the tradeoff, because if you take out the lump sum, that means you have less left in the CPF, and your monthly payments will also be less," said Mr Lee.

As for the Minimum Sum, which was $80,000 in 2003 but has risen to $155,000 currently to account for inflation, he said the amount was "far from excessive". This is especially so if a person needs at least $2,000 per month from the age of 65.

Next year, this amount will be raised to $161,000.

"Beyond this, I don't see the need for any more major increases in the Minimum Sum," said Mr Lee. But it may still have to be adjusted from time to time as people are living longer and they will need more money for their retirement.

For the elderly who are struggling to make ends meet, the Government will step in with the new Silver Support Scheme. They will be paid a bonus each year from age 65, on top of other government and community support that they already receive.

More people will also be able to cash out their flats as the Government will extend the Lease Buyback Scheme to four-room flats, covering more than half of all flat owners in Singapore.

Mr Lee added: "The CPF and home ownership provide for our needs when we retire. They are good schemes, they work well for the majority of Singaporeans, but they are not one-size-fits-all policies.

"But we are going to improve them further so that we can better support the lower-income elderly who need more help, and we will make it more flexible so as to meet the needs of more Singaporeans."


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