Straits Times Singapore, 17 Aug, 2010, Tuesday
Second chance to join CPF Life
Changes to CPF Act mean more will be auto-included in annuity scheme
By Kor Kian Beng, Political Correspondent
CENTRAL Provident Fund (CPF) members who do not have sufficient balances at 55 years old to join the CPF Life annuity scheme automatically will now have a second chance to do so.
Parliament yesterday passed changes to the CPF Act to allow those with $60,000 in their Retirement Accounts at the age of 65 to be auto-included in the scheme which provides a steady stream of retirement income for life.
Previously, only those with at least $40,000 in their Retirement Accounts when they turned 55 from 2013 would have been auto-included in CPF Life.
Now, those who do not have enough in their Retirement Accounts at 55 will be included automatically if their account savings swell to $60,000 by the time they turn 65.
The change will bump up the participation rate of the scheme’s first auto-included cohort to 80 per cent, up from an earlier forecast of 70 per cent, Manpower Minister Gan Kim Yong said yesterday.
The scheme is aimed at helping Singapore cope with the challenges of an ageing population as an individual’s savings may not be able to keep pace with longer life expectancy and health-care costs.
Mr Gan said the change in the CPF Life scheme was a recognition that members’ CPF savings would typically continue to grow between ages 55 and 65.
Their balances could grow through property refunds, top-ups, interest income and employment wages if the members continue working, added Mr Gan.
Also, to provide a higher monthly income from CPF Life, the additional money that members get in their Retirement Accounts between ages 55 and 65 will be used for the scheme, said Mr Gan.
Welcoming the changes to the Act that would further strengthen the CPF as a social safety net were four Members of Parliament: Madam Halimah Yacob (Jurong GRC), Madam Ho Geok Choo (West Coast GRC), Ms Sylvia Lim (Non-Constituency MP) and Associate Professor Paulin Straughan (Nominated MP).
But Prof Straughan expressed concern about those who would still miss out on the two auto-inclusion criteria, as they might simply not have enough in their Retirement Accounts. She singled out ageing homemakers as one such group.
Mr Gan clarified that CPF Life does not stipulate a minimum balance and that those with lower balances can still choose to opt into the scheme. He listed several efforts to help such CPF members boost their Retirement Account balances.
These include the Workfare Income Supplement scheme targeted at encouraging older, low-wage workers to continue working by augmenting their incomes through regular payouts.
A new re-employment law due by 2012 will also help older workers stay employed beyond 62 years old and save more for retirement.
Mr Gan yesterday also announced several changes to the Act, including how CPF savings of deceased members would be disbursed to their beneficiaries.
From next January, CPF members can opt to have their savings transferred directly to the CPF accounts of their nominees, instead of having the payouts made in cash upon their death.
Also, instead of having to wait for nominees to apply for the bequeathed funds, the CPF Board will automatically disburse the money to the nominees.
Changes will also be made to the way the CPF Board manages unclaimed monies of deceased CPF members. On average, it handles about 280 such cases yearly, involving some $2.4 million of unclaimed monies.
First, CPF savings left unclaimed for six months upon the member’s death will be moved into the Ordinary Account, which pays a lower interest than that for the Special, Medisave and Retirement Accounts.
Second, these CPF savings, if left unclaimed for seven years following the death of a member, will be moved into the general monies of the CPF Fund.
In response to queries from Madam Halimah, Mr Gan said the CPF Board does its best to locate the beneficiaries through letters and newspaper notices, among other efforts.
Over the past five years, he said it has been able to locate and make payments to nominees in 98 per cent of all cases, with the 2 per cent ‘remaining outstanding despite the board’s efforts’.
But Mr Gan also added that valid claimants could approach the CPF Board at any time ‘even after the seven years to claim the monies, including interest’.
kianbeng
my comments:
all those who are born on 1 january 1958 onwards and who have at least $40,000.00 in their cpf retirement accounts will be automatically included in the cpf life scheme.
there are 4 cpf life plans but the most popular so far is the cpf life plus plan providing a higher monthly payout but leaves less bequest for beneficiaries. the straits times reported that more than 55% of participants have opted for this plan. the other cpf life plans are life balanced, life basic and life income plans.
what this change means is that cpf members who do not have enough in their retirement accounts at age 55 will be automatically included if their account savings grow to $60,000.00 by the time they turn 65 years of age.
and i understand there is no opt-out option. |
