Making sense of retirement options

HDB flats in Punggol. -- PHOTO: ST FILE
HDB flats in Punggol. -- PHOTO: ST FILE

Liberalising of the Housing Board's lease buyback scheme is being made chiefly in response to concerns about the sufficiency of older Singaporeans' retirement funds. In this light, the concession is to be seen in conjunction with another proposal to permit account holders limited withdrawals from CPF retirement balances at the draw-down age.

The long-held orthodoxy is that the state is a more dependable custodian in husbanding retirement assets. There is now a need to politically accommodate the expectations of older Singaporeans who want to savour a portion of their CPF savings - even when not abundant - and feel denied by the upward ratcheting of Minimum Sum requirements.

The twin strategy balances the withdrawal of some CPF savings with the option of cashing out HDB flat leases - while remaining in occupation - to supplement retirement allowances. The schemes are targeted at older cohorts whose working lives predated the era of globalisation and better salaries. Their CPF savings being modest, they ought to be helped in ways that are feasible yet not wasteful.

With lease buyback eligibility extended to four-room flats, plus the offer of varying periods for which they can be monetised, there is, in theory, considerable scope for elderly households to have more cash in hand for discretionary spending. Some 220,000 three- and four-room elderly households will be eligible for lease buybacks, twice as many as when the scheme was confined to three-roomers. Most of these are mortgage-free, a push factor to cash out, and some have asked if raising the income ceiling from $3,000 to $10,000 is too generous as those earning a five-figure salary are hardly cash-poor.

National Development Minister Khaw Boon Wan says he does not expect a flood of applications. On balance, it is just as well. It is comforting for older Singaporeans to know the facility is available if pressing needs arise.

Prudence, then, is the decider. A sense of responsibility should accompany the availability of more options. The elderly who crave dignity and independence will have to make hard-headed choices about how to finance their retirement years. Those who prefer the comforts of living in an extended family might weigh the choices of rental or an opportunistic sale. Health is another issue to be considered. These are matters that must be considered as a whole and discussed widely, as Speaker of Parliament Halimah Yacob is striving to do within the Malay/Muslim community.

One must be prepared for some cases of financial abuse of elders and profligate spending. Families will then be tested in how help is extended, without reflexively seeking handouts that might strain future taxpayers.