SINGAPORE - Retiree Eileen Tan has lived in a four-room flat in Toa Payoh for the past 41 years.
The 66-year-old is familiar with her neighbourhood and enjoys the sunset view from her 20th-storey unit.
Madam Tan, who lives with her husband and daughter, is reluctant to move out.
While she is not cash-tight, she is interested in the enhanced Lease Buyback scheme (LBS) which would offer her extra cash and a higher Central Provident Fund (CPF) life payout when she sells the tail-end of the lease of her flat to HDB.
Madam Tan said: "My daughters are filial and they give us enough pocket money to spend.
"But it's always nice to have more cash to spare and I get to keep the flat at the same time."
Previously, she would not have qualified for the scheme, which was targeted at low-income seniors living in three-room or smaller flats.
So it was good news for her when Prime Minister Lee Hsien Loong announced at the National Day Rally last month that the scheme would be extended to four-room flats.
Yesterday, the Ministry of National Development (MND) announced details of key changes to the scheme, which will kick in next April.
Currently, 290,000 HDB flats are owned by Singaporeans aged 55 or older, with 75 per cent of them being four-room or smaller.
The LBS, introduced in 2009, has been taken up by 800 households so far.
It was enhanced last February, offering a $20,000 cash bonus, up from the previous $10,000.
PropNex Realty chief executive Mohamed Ismail said the previous LBS scheme had a lukewarm response because of the rigid 30-year lease period and small upfront cash proceeds.
An MND spokesman said that 142 out of the 340 households who signed up for the LBS scheme last year retained some cash after topping up their CPF to the prevailing minimum sum.
Of the 142, only two households have two owners.
With the new changes, it is expected that most seniors in households with two or more owners will get to retain some cash after topping up their CPF, said the spokesman.
About half of all households eligible for the LBS have joint owners.
Use Money Wisely
MND minister Khaw Boon Wan encouraged seniors to exercise prudence and caution after getting the additional cash proceeds.
He advised them to use the money to voluntarily top up their retirement accounts.
The men, in particular, should top up the retirement accounts of their wives, many of whom could be housewives with no CPF.
In his blog post yesterday, Mr Khaw said: "The best advice I can offer is to use the substantial cash proceeds to voluntarily top up yours and your spouse's retirement accounts.
"That will be a sure way to ensure that you can both enjoy a steady income each month in your golden years.
"Of course, the best option is to live with your children to enjoy their company, and rent out your flat as your additional retirement income. Then there is no need for LBS.
"But for some, because of their family circumstances, the enhanced LBS offers additional security."
Last year, we held the Our Singapore Conversation and there many seniors who were living in larger flats asking for lease buyback because they felt that right-sizing, moving to a studio apartment, taking the Silver Housing Bonus, they are all attractive options, but they still preferred to grow old in the comfort of their own homes and I can fully understand that.
- Prime Minister Lee Hsien Loong in his National Day Rally speech on Aug 17
Key Changes
Extension to 4-room flats
The enhanced Lease Buyback Scheme (LBS) will be extended to four-room HDB flats.
With this extension, the scheme will cover 75 per cent of elderly HDB households compared to 35 per cent now.
The owners must have lived in the flat for at least five years.
Four-room households will receive a $10,000 cash bonus per household when they participate in the scheme. This is on top of the proceeds they receive from selling the tail-end lease of their flat to HDB.
Income ceiling raised
The income ceiling will be raised to $10,000 from $3,000 per month.
The increase in income ceiling will allow the elderly who are still working and/or living with their family members to qualify for these monetisation options.
Relaxation of CPF Retirement Account top-up
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About half of the LBS-eligible households have two or more owners now.
For these households, each owner will only be required to top up his CPF Retirement Account (RA) to half the age-adjusted prevailing CPF Minimum Sum (MS), instead of the full age-adjusted prevailing MS.
They will be able to retain more cash upfront.
If there is only one owner, the full CPF minimum sum remains the same.
Lease length flexibility
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Elderly homeowners can now choose to sell a shorter or longer lease back to the Government instead of having a standard 30-year lease for all.
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Those aged 63 to 69 can opt to own the flat for 30 or 35 years.
Those aged 70 to 74 can opt to own the flat for 25, 30 or 35 years.
Those aged 75 to 79 can opt to own the flat for 20, 25, 30 or 35 years.
Those aged 80 or older can opt to own the flat for 15, 20, 25, 30 or 35 years.
A household must have at least 20 years of lease to sell to HDB to be eligible for the LBS.
This article was first published on September 4, 2014.
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