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MPs seek clarifications on CPF scheme

Members of Parliament raised concerns on the feasibility of allowing greater flexibility on CPF withdrawals, and how the adequacy of the CPF Minimum Sum is determined.

SINGAPORE: Seven Members of Parliament sought clarifications on the Central Provident Fund (CPF) from Manpower Minister Tan Chuan-Jin in Parliament on Tuesday (July 8). Here’s a summary of the issues discussed:

Can there be more flexibility for CPF withdrawals?

Mr Ang Wei Neng, the MP for Jurong GRC, asked if Singaporeans aged 55 could be allowed to choose withdrawing S$10,000, S$5,000, or nothing at all. Those who choose not to withdraw sums at age 55 could be rewarded in the form of top-ups to their Medisave accounts, he suggested.

The House was told that the CPF lump-sum withdrawal was pegged to age 55 many years ago because the life expectancy then was five to seven years beyond that age.

Is it possible to change the age for lump-sum CPF withdrawal?

Ms Lee Bee Wah, the MP for Nee Soon GRC, asked if the withdrawal age could be tweaked. If the life expectancy is 82 years now, for example, can Singaporeans be given the option of withdrawing their lump sums five to seven years before they turn 82, she suggested, so they can manage their money?

Mr Tan replied that “we don't know how long each individual will live, but as a whole, individuals will live longer. The more you take out, the more you reduce that monthly payout you have available. Are you able to stretch that for a long period?"

Can low-income workers be given more flexibility for their CPF monies?

MP for Tampines GRC Irene Ng asked for greater flexibility for low-income workers caught out by the policy to lock their funds in retirement accounts at age 55.

To this, Mr Tan said the number of people who face difficulties with their mortgage loan as a result of turning 55 years is low - about 500 appeals a year are received on this issue a year. Of these, two-thirds are approved.

He also pointed out other avenues for help, such as housing counsellors in HDB branches to assist with financial counselling, and tailoring solutions to help individuals with mortgage arrears.

HDB also works out ways of reducing or deferring mortgage instalments. Other solutions include referring them to Community Development Councils for financial or employment assistance.

Are the monthly payouts and the Minimum Sum adequate?

Nominated MP Laurence Lien asked how the Government assessed the adequacy of the Minimum Sum, and whether the monthly payout of S$1,200 was enough. "The concern is that for those where the Minimum Sum is adequate, they do not accumulate enough to have the Minimum Sum at 55. For those who meet the Minimum Sum, (the monthly payout) is not adequate."

Mr Tan responded that for families that were slightly below the middle-income level, “from a monthly payout basis, that is what we feel will meet their basic needs. Does it mean that individuals survive solely on their minimum sum in itself? No. For many of us, we do have other forms of savings. Many Singaporeans own their housing, which is why housing remains a very important part of retirement adequacy".

Those who do not meet their Minimum Sum do not need to top it up, the minister added. “What it means is that their monthly payout will be less,” he said. In such cases, they might be able to manage on that payout, supplemented by other available schemes. “If they do have challenges, that is where the state would come in through the social safety net, to augment and provide for other needs."

How to better communicate CPF schemes?

Mr Seng Han Thong, MP for Ang Mo Kio GRC, said the CPF scheme was a complicated one, and asked if its communication on the ground could be enhanced.

Mr Tan said the CPF Board is always seeking ways of communicating the scheme in a simpler way. It is also looking at improving the CPF website, by adding videos and infographics of policies, and pushing out more information on mainstream media.

"The CPF is a very significant and important pillar,” he said. “It is important to have debates and discussions based on facts, based on what it is and what it is not, and not on speculation for whatever reasons that individuals choose to distort this and create fear and anxiety."

Mr Tan said while the system will not cater to every person's individual needs, it has provided for Singaporeans well.

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