THE Government will campaign 'aggressively' to encourage Singaporeans for whom the annuity scheme is not compulsory, to opt in.
This include those older than 50 this year, and those with less than $40,000 in their Minimum Sum balances. Responding to the recommendations by the committee tasked to design a longevity insurance scheme, Manpower Minister Ng Eng Hen on Wednesday said they would fix the 'inadequate' retirement system.
But much remains to be done in the next five years before the CPF Life scheme, to be administered by the Central Provident Fund Board, kicks in in 2013.
Under the scheme, workers will pay premiums out of their Minimum Sum to get a monthly income for as long as they live.
Said Dr Ng: 'It's a great weight lifted off one shoulder, now it's transferred to the other shoulder. CPF Board will have to bear this but the foundations are much stronger for them to run the CPF Life.'
One key issue is the push to get those left out of the scheme to voluntarily join in.
'In the immediate future, what CPF Board will be embarking on is an aggressive campaign to encourage opt-ins,' said Dr Ng. 'We'll facilitate opt-ins because I think this is a much needed piece in our CPF system.' Currently, there are three groups for whom the scheme is not mandatory:
- Those above 50 this year. There are about 900,000 such residents.
- Those with less than $40,000 in their Minimum Sum balances. They make up a quarter - about 9,000 - of the 35,000 workers aged 50 this year who will be the scheme's pioneer batch.
This figure is expected to decrease for subsequent cohorts, as they have a longer period to earn extra interest.
Some 100,000 informal, contract or self-employed workers who do not have any CPF at all.
However, the minister acknowledged that these groups will have to pay relatively higher premiums or accept lower payouts for life.
In particular, the committee had called on the Government to offer 'one-off assistance measures' to those with insufficient CPF funds to help them take part in the scheme.
Dr Ng said that it is a sensible suggestion, one that the Government will take 'very seriously'. It will respond in due course.
Read the full story in Thursday's edition of The Straits Times.