CPF -How to address the various concerns effectively, decisively and adequately to address the public’s disquiet over the Minimum Sum being raised to $155,000, and the concern of CPF retirement adequacy?
========
CPF – mortgage it rather than sell it and lease it back….
I am grateful to Today’s Voices for publishing my letter [see JPEG format below] though heavily edited:
“Consider reverse mortgage scheme to give retirees another option”
I, too, hope that retirees use the lease buyback scheme as a last resort. The concerns about ageing and being asset-rich but cash-poor are real, though. (“Sad if success of buyback scheme based on higher take-up rate”; Aug 22)
When the crunch comes, the options are few. And one option not mentioned at the National Day Rally is that of reverse mortgages, although it was said in Parliament in March that the Government is conducting a serious study.
By mortgaging the flat to a bank, instead of using the lease buyback scheme, owners would also receive a steady stream of cash payments to see them through their winter years.
I think the Monetary Authority of Singapore should supervise such a scheme to ensure adequate protection for both the banks and retirees, and that it is financially viable, based on a win-win situation for both parties.
For example, in the event of the mortgagor’s death, the mortgage instrument could allow the beneficiary of the property to continue receiving the monthly payments until the mortgage ends.
The beneficiary should also have an option to redeem the mortgage by settling the amounts disbursed plus accumulated interest to regain the property. This ensures that dependents are not left without a roof over their heads.
The scheme should allow only retirees, and not the young, to mortgage their flats. It should not allow the banks to own the flats or force a sale at the expense of the owner.
The bank should sell the flat to a Singaporean in the open market upon the expiry of the mortgage. And any surplus from the sale should be paid to the mortgagor or the beneficiary.
If the bank cannot get a buyer, it would have the option to sell the flat to the Housing and Development Board. Importantly, the reverse mortgage scheme would help soak up market liquidity and give the domestic economy a boost.
=======
What I wrote:
I refer to “Sad if success of buyback scheme based on higher take-up rate” in Today Voices, 22nd August 2014
PM Lee announced at the National Day Rally on 17 August that the Govt would encourage the lease and buy-back scheme for HDB flat retiree owners to unlock the property value of their properties. One proposal not mentioned is that of reverse mortgages, although it was disclosed in Parliament in March that the Govt would study it.
The concerns about ageing and being asset-rich but cash-poor are real.
Some Singaporeans struggle to place food on the table.
We know staring at the ceiling will not help those in financial plight. When face with the crunch, the options are few. I hope the retirees use the LBB Scheme as a last resort.
By mortgaging the flat to the banks instead of using the LBB Scheme, the flat owners will retain ownership and receive a steady stream of cash payments to see them through their winter years.
MAS should supervise the mortgage scheme to ensure adequate protection for both the banks and retirees.
For example, in the event of premature death of the mortgagor, the mortgage instrument should allow the beneficiary who inherits the property to continue receiving the monthly cash payments until the mortgage ends.
There should be an option for the inheritor to redeem the mortgage by settling the amounts disbursed plus accumulated interest to regain the property. This will ensure that dependents are not left stranded without a roof over their heads.
The law should allow only retirees, and not the young, to mortgage their HDB flats with banks. The scheme should include those owning private property but cash poor to mortgage their property. It must be financially viable based on a win-win situation for both parties, and for the banks to pay the retirees a steady steam of monthly cash payments for life.
For the mortgage scheme to work, the Govt should revise the laws to address the interest of the banks and the flat owners. It should not allow the banks to own the HDB flats or force a sale at the expense of the flat owner.
The bank should sell the flat to a Singaporean in the open market upon expiry of the mortgage, and any surplus from the sale should be paid to the mortgagor or the beneficiary. If the bank cannot get a buyer, the bank would have the option to sell the flat to the HDB.
More importantly, the reverse mortgage scheme would help soak up market liquidity, and give the domestic economy a boost.
=============
==========
tankoktim 