Voluntary Extension of Dependants' Protection Scheme

Ms Lee Li Lian asked the Minister for Manpower whether the Ministry can allow voluntary extension of the Dependants' Protection Scheme (DPS) up to age 65.

Mr Tan Chuan-Jin: The Dependants’ Protection Scheme (DPS) was introduced in 1989, with the primary objective of providing CPF members, especially those who have just started working and have not built up substantial savings in their CPF account, with affordable insurance protection. It provides their dependants with a sum of money to tide them over the initial difficult period should they become permanently incapacitated or pass on.

Currently, DPS cover stops at age 60. The need for DPS is expected to decline as the member approaches retirement. His children are likely to be already working or less financially dependent. He would also have accumulated significant CPF savings which could support his remaining dependants in the event of his death.

In addition, premiums for coverage beyond age 60 would be significantly higher because of higher mortality rates. The DPS premium for coverage from age 60 to 65, is estimated to cost about as much as what a CPF member would pay over the entire preceding 35 years between the ages of 25 and 60. Extending DPS coverage to age 65 on an opt-in basis will result in even higher premiums because of higher anti-selection risk where a larger proportion among the less healthy may choose to take up DPS coverage.

Setting the DPS age limit at 60 strikes a balance between providing insurance protection for the CPF member’s dependants and preserving his CPF savings for his own retirement needs. CPF members who wish to have life insurance coverage beyond age 60 may consider obtaining it from private insurers.