Posted: 28 February 2012 1839 hrs
SINGAPORE: Non-Constituency Member of Parliament,
Lina Chiam questioned the use of the Silver Housing Bonus, calling
it "impractical" from a financial perspective.
To better provide for retirement needs, she suggested that
retirement funds be pegged to the inflation index.
This could take the form of an inflation-protected scheme pegged to
forecasted inflation.
She said the government should also consider reducing the amount of
proceeds from the sale of homes that have to go into CPF
accounts.
"Firstly, a homeowner will forgo a significant sum of sales
proceeds for future consumption through the CPF Life Annuity. For a
Singaporean who has short-term liquidity needs, this scheme does
not help. Moreover for retirees, they do not enjoy lower property
tax even though they no longer draw a salary," said Mrs
Chiam.
"Secondly, for other homeowners, this sum that goes into the CPF is
not automatically adjusted for inflation. If a Singaporean takes up
the scheme without a long-term perspective, the real value of his
money in his CPF account might diminish with inflation," she
said.
In contrast Zaqy Mohamad, MP for Chua Chu Kang GRC, described the
Silver Housing Bonus a good move.
The $20,000 bonus is given to elderly households who downgrade from
a bigger flat to a three-room or smaller flat.
But Mr Zaqy pointed out that many elderly who own HDB flats are
less willing to uproot themselves and downgrade to a smaller
flat.
Instead, he said the Lease Buyback Scheme - which involves selling
the tail end of a flat's lease back to the Housing Board - is a
more rational alternative.
Noting the low adoption rate so far, Mr Zaqy called on the
government to expand the eligibility criteria for the scheme.
Mr Zaqy said: "The scheme should be made available for older
Singaporeans in larger flats to monetise their needs. The existing
position that larger flat owners can downgrade to monetise their
assets involve high risks in market cycles and cash
transactions.
"The lease buyback scheme is a safer, more rational alternative.The
adoption of the lease buyback scheme may also be better among the
middle-income population as the amounts monetised from larger flats
are likely to be higher, and the education profile of the flat
owners may mean they are better to appreciate how the schemes will
benefit them."
- CNA/cc/de
