Khaw Boon Wan: Elderly should live with their children and rent out their HDB

Current Lease Buyback Scheme (LBS) is good, as it allows seniors to get a monthly income from their flat, while continuing to live in the home they love.

But it can be more flexible.

This was the distinct feedback we got from Singaporeans when they shared with us their views during the Our Singapore Conversation on Housing.

Today’s announcement on the 4 enhancements to the LBS is our response to this feedback and request.

The extension to 4-room flats is the most significant enhancement, as it opens up this monetisation option to many households. Altogether, 75% of elderly households will soon have access to this option.

Another enhancement is the introduction of different lease options. Younger seniors can choose longer leases, while older seniors can choose shorter leases in return for more cash proceeds.

The enhancement to the CPF top-up rule is another major enhancement. It has direct impact on joint flat owners who make up half of the LBS-eligible households. Currently, joint owners will have most of their cash proceeds used to top up their Retirement Accounts. The enhancement has halved the top-up requirement. This means that they will have more upfront cash proceeds when they join the LBS.

While these enhancements are good, I do worry about some elderly spending unwisely away the substantial cash proceeds. For example, many overseas properties are being marketed here. There are bound to be disappointments and even losses.

I urge our seniors to exercise prudence and caution.

The best advice I can offer, is to use the substantial cash proceeds to voluntarily top-up you 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.