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Withdrawal age for CPF minimum sum to be raised progressively to 65

According to Yahoo!Singapore News :

SINGAPORE : The government is taking more steps to ensure that Singaporeans have enough CPF savings for their old age.

It is raising the withdrawal age for the minimum sum from 62 to 65.

This was announced by Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday.

Currently, Singaporeans who have turned 62 can start withdrawing their CPF minimum sum and enjoy a S$790 monthly payout for the next 20 years.

This will change in five years (in 2012) when the new “Draw-Down Age”, or DDA, is progressively raised to 65.

The first to be affected will be those aged 56 or 57 by the end of 2007.

They will have to wait one year longer – till they are 63 – before they can tap into their CPF minimum sum.

Those 54 or 55 this year will have to wait two years longer – till they’re 64 while those between 49 and 53 can only withdraw the minimum sum when they hit 65 - the new DDA.

PM Lee said: “I know this is not so popular. But we have no choice. People are living longer, we have to work longer. And we have to start drawing on the reserves later. Therefore we have to start moving now. Not move all the way now. But we have to start moving now. And we will get there in good time.”

And the prime minister has promised something extra for older workers who are affected by the change.

These will come in the form of Deferment Bonuses into their CPF retirement accounts.

Details will be announced later.

But just delaying the withdrawal age is not enough to cover older Singaporeans who are living longer than expected.

So the government has decided to make annuities compulsory for Singaporeans aged 50 and below.

They will have to buy annuities when they reach 55.

CPF members are currently allowed to convert their minimum sums to annuities with an insurance company and then get monthly payouts for the rest of their lives.

But the voluntary scheme has not been popular.

Mr Lee said: “It’s partly because Singaporeans don’t understand annuities, don’t understand why they need them. It’s also because frankly speaking, the returns haven’t been very attractive. The costs have been high. But despite these limitations, we do need annuities as part of our old age planning.”

Details on the CPF changes will be spelt out when Parliament sits next month.

Are you kidding me? So, Singaporeans cannot retire until the age of 65 eh? What happens if they are “too old” to even walk properly? What happen if they are bed ridden or having some common sickness like High Blood Pressure and Diabetes? Do people in Singapore ever retire? So if the few Singaporeans start living longer then we need to base on such statistic to force the rest of the population to work LONGER? Yes, aging population is a problem for not only Singapore but also the whole world but understanding the problems of Government inability to “spend” more money to take care of more elderly when they are the best paid minister in the WHOLE WORLD!

Obviously there must be some sort of work that can allow older workers to make a decent living even with their diminishing capabilities and energy…like what? Macdonald cleaner? Toilet money collector? Tissue seller? Drink Can recyclers? Beggars?

Yes, some people might even think of MLM stuff to make them sell stuff they cannot afford…imagine asking them to maintain a monthly purchase of $90 of toiletries and washing powder. The evil hawks of MLM will not leave these people alone…haiz

There must be something they can do!!? Any ideas? Yes, they can do their hobbies as career…I heard some farmers are making some quick bucks selling their produce to supermarket and direct to consumers at a much higher price. They can make stuff to sell…but they need some guidances to make it…and raw materials.

More ideas must be needed! The future will be worst when the energy crisis starts to hit the electricity market in the next 5 years. Imagine what they have to earn to pay for high cost of living in the future! If you are below the age of 30, start thinking big for our retirement early! PLEASE!

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27 August 2007 at 02:14 - Comments
  • Anonymous
    3rd World Savings, 1st World Cost of Living

    It has been argued strongly that elderly Singaporeans are not saving enough, despite the CPF scheme. This is hardly surprising.

    The CPF was introduced in 1955 when Singapore was a Third World colony. Our per capita GDP (at current market prices) in 1960 was S$1,306. This figure rose significantly to S$13,725 in 1983 and to S$35,552 in 1996. Today Singapore is a First World nation and this is well backed by our 2006 per capita GDP figure of S$46,832.

    The transformation of our country has led to rapid increase in the cost of living as suggested by historical Consumer Price Index (CPI) data. Using 2004 as the base year (=100.0), the CPI was 31.9 in 1961 (1960 figure not available), 74.7 in 1983, 94.3 in 1996 and 101.4 in 2006. (Source for statistics: http://www.singstat.gov.sg/)

    Senior Singaporeans played individual minor, but fundamental roles in driving this economic miracle. Back in the 1960s, through the 1990s, they probably could not have imagined, how with hindsight, their salaries, by the same token their CPF savings, will appear so meagre today. Likewise they would not have expected the cost of retirement to be so expensive.

    It appears that the pioneer generations of Singaporeans have become victims of their own hard work and success. Having earned Third World wages and made Third World savings in their younger days, they suddenly find themselves living, and dying, under the weight of First World costs.

    Over the years Singapore has accumulated substantial wealth, including those made through investments worth millions by the GIC and Temasek Holdings. No one guarantees workers above 62 will find good paying jobs and the proposed compulsory annuity’s payout of $250 to $300 is a drop in the ocean by today’s costs of living. While we applaud our government’s initiatives to stretch our retirement savings, it is high time we tap on our riches to help those with inadequate CPF monies to overcome the disparity of Third World savings, First World costs.

    It is increasingly urgent for the government to lower the cost of living for retired Singaporeans. This could be done by co-paying for their essential expenses, such as medical, healthcare and public transport. This should not be viewed as pouring resources into a bottomless pit. Just as government investments into the economy through mega-projects like the IRs and hosting of F1 are now rewarding handsomely, investments into such schemes will generate the economy and the welfare of our people.

    The CPF Board website states “CPF ensured that workers could support themselves with dignity in retirement”. Would the government play its part to fulfil this?
  • Anonymous
    3rd World Savings, 1st World Cost of LivingIt has been argued strongly that elderly Singaporeans are not saving enough, despite the CPF scheme. This is hardly surprising. The CPF was introduced in 1955 when Singapore was a Third World colony. Our per capita GDP (at current market prices) in 1960 was S$1,306. This figure rose significantly to S$13,725 in 1983 and to S$35,552 in 1996. Today Singapore is a First World nation and this is well backed by our 2006 per capita GDP figure of S$46,832. The transformation of our country has led to rapid increase in the cost of living as suggested by historical Consumer Price Index (CPI) data. Using 2004 as the base year (=100.0), the CPI was 31.9 in 1961 (1960 figure not available), 74.7 in 1983, 94.3 in 1996 and 101.4 in 2006. (Source for statistics: http://www.singstat.gov.sg/)Senior Singaporeans played individual minor, but fundamental roles in driving this economic miracle. Back in the 1960s, through the 1990s, they probably could not have imagined, how with hindsight, their salaries, by the same token their CPF savings, will appear so meagre today. Likewise they would not have expected the cost of retirement to be so expensive. It appears that the pioneer generations of Singaporeans have become victims of their own hard work and success. Having earned Third World wages and made Third World savings in their younger days, they suddenly find themselves living, and dying, under the weight of First World costs. Over the years Singapore has accumulated substantial wealth, including those made through investments worth millions by the GIC and Temasek Holdings. No one guarantees workers above 62 will find good paying jobs and the proposed compulsory annuity’s payout of $250 to $300 is a drop in the ocean by today’s costs of living. While we applaud our government’s initiatives to stretch our retirement savings, it is high time we tap on our riches to help those with inadequate CPF monies to overcome the disparity of Third World savings, First World costs. It is increasingly urgent for the government to lower the cost of living for retired Singaporeans. This could be done by co-paying for their essential expenses, such as medical, healthcare and public transport. This should not be viewed as pouring resources into a bottomless pit. Just as government investments into the economy through mega-projects like the IRs and hosting of F1 are now rewarding handsomely, investments into such schemes will generate the economy and the welfare of our people. The CPF Board website states “CPF ensured that workers could support themselves with dignity in retirement”. Would the government play its part to fulfil this?