SINGAPORE - Singaporeans are turning away from annuities in favour of higher monthly payouts that may not last for the rest of their lives.
Government and union leaders have been encouraging people to adopt annuities, which guarantee payouts for life, in order to secure a reliable monthly income.
But more Singaporeans are adopting to either take out their Central Provident Fund (CPF), the compulsory pension savings system, when they turn 55 or leave it in a cash account. The fund requires savers to leave almost S$100,000 in the account or exchange it for an annuity when savers reach 55.
Most are spurning the annuity, with just 2,358 out of 57,129 in 2006 using the minimum sum to buy an annuity, according to CPF statistics.
Previously, in an interview with local newspaper The Straits Times, minister Lim Boon Heng, who oversees issues on ageing, observed that making annuities compulsory was a “good idea, but not popular with many people”.
“But this is an area worth developing. We should also encourage insurance companies to devise annuity products that are more attractive,” added Mr. Lim.
The National Trade Union Congress assistant secretary-general, Seng Han Thong, is supporting the push towards compulsory annuities.
“The challenge for us as union leaders is to create a greater awareness of annuity plans and clarify any doubts on it,” he said.
He added it was a “no-brainer” for the government to push for compulsory annuities as there was potential for many people to be left without an income.
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.