- POSTED: 17 Aug 2014 22:31
- UPDATED: 17 Aug 2014 23:44
A new scheme for low-income elderly Singaporeans will see the Government providing annual bonus payments to help them with their living expenses.
SINGAPORE: Singapore's Central Provident Fund (CPF) and HDB schemes have helped the majority of the population save enough for their retirement, said Prime Minister Lee Hsien Loong in his National Day Rally on Sunday (Aug 17). But these are not one-size-fits-all policies, and the bottom 10th to 20th percentile may fall through the cracks, said Mr Lee. These people may not accumulate enough CPF funds during their working lives, and do not have an HDB flat or family support to fall back on.
"In their case, these individual efforts will not be enough, so the Government and the society must help to do more, must do more, to help them in their retirement. So for this group, we should supplement their payouts from their own CPF savings with bonus payments from the Government, just the same way as we have Workfare to supplement the wages of low-income workers," Mr Lee said.
Under the new Silver Support scheme, low-income elderly Singaporeans will get a yearly bonus, starting from the age of 65. This comes on top of other Government and community support these individuals already receive.
Prime Minister Lee says that personal responsibility remains important, but the community and Government will play a larger role. This is part of the "new way forward" that he spoke about at last year's National Day Rally. More details on the Silver Support scheme will be announced at the next Budget.
Mr Lee also said that the while the core purpose of the CPF should still be to provide a steady stream of income in old age - he appreciates why some CPF members want to take more money out.
"They've been saving up over a lifetime of work. They want to use some of these savings. They want to do something they've have long wanted to do, some lifetime ambition. They may want to go on a journey. They may want to go on a haj, or maybe, they may have run into some family emergency and need money to deal with the emergency. So, after considering this for a long time, and discussing with my colleagues, I have decided, I will change my view, I will adjust the policy."
To increase flexibility into the CPF system - CPF members will be allowed to take out part of their savings in a lump sum, when they need to. But Mr Lee says this will subject to limits.
The amount withdrawn cannot be excessive For example, it could be capped at up to 20 per cent of the total. and this should only be done during retirement, at 65 and beyond.
Mr Lee also cautioned that members must understand that if one were to take out a lump sum, there will be less funds left in the CPF, and this means the monthly payments will be smaller.
Mr Lee noted that the CPF minimum sum will be raised to S$161,000 for people turning 55 from 1 July 2015. But he does not see the need for any more major increases in the minimum sum beyond that. He also stressed that CPF changes are complex. Important issues to consider include the rules and limits for lump-sum withdrawals; how CPF members can accept more risks when investing their savings for higher returns; and options for members who prefer their payouts to rise over time, and keep up with the cost of living, instead of getting a fixed payout.
Mr Lee says an advisory panel will be set up to study these changes. Details will soon be announced by the Ministry of Manpower.