Link between Retirement Provision Adequacy and Low Take-up Rate for Lease Buyback Scheme

Mr Gerald Giam Yean Song asked the Minister for Manpower whether there is any evidence to support the Ministry's view that the low take-up rate for the Lease Buyback Scheme among eligible home owners may be a positive sign that most seniors have other forms of support and are adequately provided for in retirement, as opposed to any shortcomings in the design of the scheme, lack of awareness of the scheme or other reasons.

Most seniors have various sources of financial support in retirement. Based on the findings of the latest Household Expenditure Survey, a retiree household in 2012/2013 received $1,740 of non-work income on average a month. The sources of income include monthly payouts from CPF, contributions from family members, rental income and investment income. Results from the National Survey of Senior Citizens 2011 also indicated that about two-thirds of senior citizens received income transfers from their children.

Many of our seniors today also have savings in their housing assets which have appreciated significantly. A typical retiree household who owns a 3-room or a 4-room flat has $300,000 or $400,000 worth of net equity in the flat respectively. The Government has introduced schemes such as the Lease Buyback Scheme (LBS) to provide Singaporeans with additional options for unlocking the savings in their flats to supplement their retirement income if they wish to do so. Seniors who have other forms of financial support might not

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see the need to take up LBS, or they may choose to move to a small flat or rent out rooms in their flats instead. One in 10 elderly households aged 55 and above sublet a room or the whole flat. These are alternative monetisation options for those who prefer to bequeath their flats to their children.

There is ongoing interest and enquiries about the housing monetisation schemes which indicate awareness of these options, but not all enquiries translate to actual applications. Nonetheless, the Government will continue to study ways to improve the range and features of housing monetisation schemes to ensure that they meet the needs of our seniors while providing flexibility to suit different preferences. MND and HDB recently announced enhancements to the LBS, which include extending LBS to 4-room HDB flats, relaxing the top-up requirement to the CPF for households with two or more lessees and having the flexibility to choose the amount of lease to retain. These enhancements were made in response to feedback on the LBS. We will continue to take in feedback for future reviews.