Buyer of last resort has arrived...

While Monetary Authority of Singapore is the lender of last resort to banks and financial institutions in Singapore, Housing Development Board (HDB) has just introduced itself as "buyer of last resort" when it unveiled "income for life" scheme for the elderly.

What is the Scheme?

Under the scheme, HDB will buy back the tail-end of a flat lease at market valuation. The money from the sale of the lease will be credited to the new CPF Life annuity account in the name of seller. HDB has estimated that it would be enough to pay about $500 per monthly for the rest of the seller's life.

Who can qualify for the scheme?

You are 62 years old and above.

You own a two- or three-room HDB flats with little or no loan outstanding.

About 25,000 flats fit the above criteria.

Any promotion now?

Yes, you get additional $10,000 above valuation. $5,000 of which will be paid to you in cash with the rest of the monies going to the annuity account.

What are the beauties of the scheme?

1. For the low income households, you now have another option in addition to other options such as rental or selling it in the open market.


2. For the government, the scheme solves its cashflow needs ie. not having to do lump sum payouts on buy backs. Some may argue that this view maybe wrong when the government actually has to debit its bank account and credit the annuity account. But more importantly, the government can still say its citizens are largely looking after themselves.


3. The seller, at 62 and above, will not have to deal with the temptation of dealing with a big chunk of monies but instead have the peace of mind of receiving regular payouts for life.

Through this scheme, the government may have solved the conundrum of living asset-rich but cash-poor.