He estimates that under this scheme, about six in 10 of currently active Central Provident Fund (CPF) members will get at least $600 a month from age 65 for the rest of their lives.

Dr Ng, whose disclosure suggests that the Government is set to accept proposals by a committee drawing up the annuity scheme, said statistics show that one in two Singaporeans who make it past age 65 will live to 85 and beyond.

Having annuities in place will help Singaporeans 'face our future and retirement with a lot of peace of mind', he said at a dialogue with 250 residents and grassroots leaders after visiting the Keat Hong division of Hong Kah GRC.

A CPF member currently starts drawing a fixed sum every month from his Minimum Sum account from the age of 65 until he reaches 85. The payouts stop after that.

But that will change when the annuity plan - called the Lifelong Income Scheme - takes effect.

Last Friday, the head of the committee designing the scheme, Professor Lim Pin, revealed some proposals. Full details will be out in a report it will issue on Feb 12.

Some key recommendations: Ensuring Singaporeans get a steady income stream for life, making the scheme flexible such as by allowing Singaporeans to decide the age at which they want to start receiving the annuity and refunding the unused portion of annuity premiums to the family of members who die.

Dr Ng described the recommendations yesterday as 'workable'. But the Government will examine the details and issue a response when the committee releases its full report, he said.

Prime Minister Lee Hsien Loong announced at last year's National Day Rally that those below the age of 50 would have to use part of their CPF Minimum Sum to buy annuities. This is because Singaporeans are living longer and need to have money for when their CPF funds run out.

Yesterday, Dr Ng spent some time during the 90-minute dialogue explaining why the annuity plan makes financial sense. Citing the example of a CPF member retiring with half the required Minimum Sum, or around $67,000, in his account, Dr Ng said he would currently draw around $600 a month between the ages of 65 and 85. Thereafter, this income dries up.

Under the annuity plan, the same member can draw roughly the same amount every month - but for as long as he lives.

Managing the scheme and the payouts is a major undertaking, which is why the CPF Board is studying the recommendations closely, he said.

Dr Ng said the Government is also studying the committee's proposal to get those who are aged above 50 to sign up on a voluntary basis.

One dialogue participant, a doctor, said many of his patients are sceptical about the scheme as they do not believe they will live longer.

Addressing the point, Dr Ng said that public consultation and feedback obtained by Prof Lim's committee showed otherwise.

The more relevant issue was that people were unwilling to make the necessary financial preparations, he said, as he called for more creative ways of promoting the annuity scheme so its benefits would be better understood.

klin@sph.com.sg

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