Debated in Parliament on 4 Aug 2014.
Mr Zaqy Mohamad asked the Minister for Manpower whether the CPF Board can consider aligning the maximum age coverage of 60 years under the Dependants' Protection Scheme to the maximum age allowable for housing loans which are often pegged to 65 years of age or the retirement limit.
Mr Zainal Sapari asked the Minister for Manpower (a) whether the Ministry can consider extending coverage under the CPF's Dependants' Protection Scheme (DPS) from 60 years old to 65 years old in tandem with a person's retirement age; and (b) what is the estimated annual premium should the DPS be extended to the age group of 64 years.
The Dependants' Protection Scheme (DPS) is a term insurance scheme that mitigates the impact of a loss of income to an insured Central Provident Fund (CPF) member's family, in the event of the member's permanent incapacity or death. It provides his dependants with a sum of money to tide over the initial period.
To help CPF members remain covered under DPS, DPS premiums are kept low and affordable. The need for DPS declines as the breadwinner approaches retirement. His children are likely to be less financially dependent or are already working. Furthermore, the breadwinner would also likely have accumulated significant CPF savings, which would go towards supporting his dependants, in the event of his permanent incapacitation or death.
Several Members of Parliament had similarly suggested extending the maximum age of coverage under DPS and we had shared our considerations. Between the ages of 25 and 60, the total DPS premiums over 35 years paid by a CPF member will amount to about $4,000. Extending DPS coverage beyond age 60 would mean significantly higher premiums, as mortality rates are higher. The DPS premium for coverage from age 60 to 65 is estimated to cost about $3,500 over just five years, or $700 per year. This is almost the same quantum as the sum of all the DPS premiums over the preceding 35 years. The additional premiums for a further DPS cover would be better reserved for the CPF member's retirement instead. Setting the DPS age limit at 60 strikes a balance between providing insurance protection for the insured member's dependants and his retirement adequacy.
The Home Protection Scheme (HPS) is a separate, mortgage-reducing insurance that protects the insured member and his family against losing their HDB flat, in the event of the member's permanent incapacity or death before the housing loan is fully paid up. Under HPS, an insured member can already be covered up to 65 years old.
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Beyond DPS and HPS, CPF members who wish to have life insurance coverage beyond age 60 may consider obtaining it from private insurance insurers.
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