Educating public on leveraging more flexible options vital: MPs
Mr James Xi was part of a focus-group session conducted by the Manpower Ministry on the CPF. Photo: Ernest Chua
SINGAPORE — Reflecting the diverse views among Singaporeans on the Central Provident Fund (CPF) system, the proposed option to withdraw up to 20 per cent of CPF savings was welcomed by those who have long sought to use the funds, be it for pressing needs or “extras” such as a vacation. In fact, they felt the recommended eligible age of 65 should be earlier.
Yet, at the same time, others said the payouts under the Basic Retirement Sum were inadequate and felt that a higher sum ought to be kept aside in the Retirement Account to ensure a comfortable standard of living in their golden years.
Secretary Clara Lee, 56, pointed out: “Things are very expensive these days and prices will continue to increase.”
However, Ms Linda Low, 53, a senior finance executive, said she would prefer to be able to withdraw a lump sum at a younger age, so she could use it to go on a holiday. “To have enough for retirement is important, but no one knows what the future will hold and I feel a lot better to be able to have my money to use whenever I need it,” she said.
Project manager James Xi, 53, disagreed. “Sixty-five is a reasonable age because people live longer today. It is important that they have enough to live on after retirement,” said Mr Xi, who was part of a focus-group session conducted by the Manpower Ministry on the CPF.
He added that he does not plan to withdraw the lump sum unless it is necessary.
Given the risk of compromising retirement adequacy in the long run, concerted efforts are needed to educate members of the public, so they can make informed decisions, said Members of Parliament, although they applauded the panel’s recommendations for providing CPF members with more flexibility.
Pasir Ris-Punggol GRC MP Zainal Supari said the panel had responded to a “strong call by the public” by proposing that lump-sum withdrawals be allowed.
However, while most will make the “correct” decision to ensure they have enough for retirement, he was concerned that some might withdraw more than they need.
Chua Chu Kang GRC MP Zaqy Mohamad felt the introduction of a Basic Retirement Sum of S$80,500 — compared with the Minimum Sum of S$161,000 for those turning 55 in July — would mean many would use that amount as the minimum benchmark.
However, this basic sum also yields a minimum basic monthly payout — of about S$650 to S$700 — which may not be enough for some to retire with. “In the long run, this flexibility and choice will address matters from the past when people (said), ‘I’m not given a choice.’ However, we have to also consider the consequences,” he said.
West Coast GRC MP Foo Mee Har cautioned that while some might feel it is a better choice to withdraw what they can and invest the money for higher returns, there have been instances when the investments yielded less than what the CPF interest rates would have provided.
“CPF members need to think hard about this,” she said, adding that educating people on how to fully leverage the flexibility offered by the new recommendations is key.
