With shades of grey sweeping over the young nation of Singapore, Singaporeans are beginning to feel the effect of the impending problems of Singapore’s ageing population.
Struck with low fertility rates and ever-rising life expectancies, the government has stepped forth with compulsory annuity schemes to provide lifelong financial lifelines to the elderly.
So what’s the significance of this?
With the implementation of the above schemes, Singaporeans will have financial coverage for the rest of their lives, eliminating all worries concerning the exhaustible minimum sum provided by the Central Provident Fund- which reduces to naught by the time one reaches 85.
Struck with low fertility rates and ever-rising life expectancies, the government has stepped forth with compulsory annuity schemes to provide lifelong financial lifelines to the elderly.
So what’s the significance of this?
With the implementation of the above schemes, Singaporeans will have financial coverage for the rest of their lives, eliminating all worries concerning the exhaustible minimum sum provided by the Central Provident Fund- which reduces to naught by the time one reaches 85.
However, will the annuity schemes provide the financial immunity that the authorities seek?
Unequivocally, annuity schemes provide a feasible solution to the financial problems that are likely to strike Singapore’s ageing population. With a rapidly diminishing ratio of economically active to economically inactive citizens, annuity schemes provide a means for the elderly to support themselves, thereby reducing the burden of the diminishing working population.
This goes a long way in providing financial security to the elderly, which would indubitably aid their medical and housing needs. Aside from providing a “nest-egg” for the elderly to fall back on, it ensures that aged individuals with long life spans are financially stable.
Aside from this, the annuity scheme also enables the elderly to manage their minimum sum in a more effective way.
Nevertheless, despite its advantages, annuity schemes may prove to be a burden for some people.
Firstly, the long term coverage of the annuity scheme doubtlessly translates to lower monthly payouts. Considering the high cost of living, and the multitude of infirmities that one encounters at an old age, the subsistence sum might not be sufficient.
Secondly, annuity schemes would probably necessitate high premiums due to its long term coverage, thus rendering the scheme unattractive. In addition to this, individuals cannot be sure whether they would reach the age of 85 (when the annuity payouts begin), making the investment risky. While remaining annuities may be transferred to family members, the “higher premiums” required to do so make the scheme unfavourable.
Unequivocally, annuity schemes provide a feasible solution to the financial problems that are likely to strike Singapore’s ageing population. With a rapidly diminishing ratio of economically active to economically inactive citizens, annuity schemes provide a means for the elderly to support themselves, thereby reducing the burden of the diminishing working population.
This goes a long way in providing financial security to the elderly, which would indubitably aid their medical and housing needs. Aside from providing a “nest-egg” for the elderly to fall back on, it ensures that aged individuals with long life spans are financially stable.
Aside from this, the annuity scheme also enables the elderly to manage their minimum sum in a more effective way.
Nevertheless, despite its advantages, annuity schemes may prove to be a burden for some people.
Firstly, the long term coverage of the annuity scheme doubtlessly translates to lower monthly payouts. Considering the high cost of living, and the multitude of infirmities that one encounters at an old age, the subsistence sum might not be sufficient.
Secondly, annuity schemes would probably necessitate high premiums due to its long term coverage, thus rendering the scheme unattractive. In addition to this, individuals cannot be sure whether they would reach the age of 85 (when the annuity payouts begin), making the investment risky. While remaining annuities may be transferred to family members, the “higher premiums” required to do so make the scheme unfavourable.
Thirdly, the annuity schemes might add to the economic burden of low-income families. Such families may not have enough “lump sum money” to procure immediate, or even deferred annuities.
A novel approach to this problem might be to make the investment in life annuities a default option upon retirement, rather than a mandatory one. This means that one must opt out of the annuity scheme if he finds it disadvantageous. While this approach protects individuals who are disadvantaged by the annuity scheme, it ensures that most Singaporeans adopt it, thus creating a “win-win situation” on the government’s and citizen’s part.
With limited knowledge on the needs and concerns regarding Singapore’s ageing population, my comments do have their limitations, and may hold assumptions that the annuity scheme would disadvantage a significant number of people. Having little knowledge on governmental policies and constraints, I may also be biased towards the financial deficiencies and disadvantages of the annuity scheme.
See article at:
See National Day Rally Speech on Annuities at:
1 comment:
You do well to recognise the limits to your experience, but in spite of this, your commentaries demonstrate mature understanding of the issues. I also enjoy the humour you inject into your responses - there's thought behind them too.
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