- POSTED: 29 May 2014 17:36
The Opposition MP also called for a third CPF Life plan so that Singaporeans can get a monthly payout starting from the age of 60.
SINGAPORE: Opposition Member of Parliament Png Eng Huat on Thursday (May 29) suggested changes to the CPF system to help Singaporeans cope better with retirement.
Speaking in Parliament, Mr Png proposed that it was time for the Government to review the formula used to determine interest rates for the Special, Medisave and Retirement Accounts (SMRA). He also called for a third CPF Life plan so that Singaporeans can get a monthly payout starting from the age of 60.
On determining SMRA interest rates, Mr Png said the current interest rate, pegged at the yield of the 10-year Singapore Government Security (SGS) plus 1 per cent, has been in use since January 2008. The Manpower Ministry stated then that the Government would review this formula and fine-tune it, if necessary, after five years, he said.
"While we want Singaporeans to work longer and harder for their retirement, it is also prudent to make our CPF savings work harder for us at the same time,” said the Workers' Party MP.
“We have passed the five-year mark. We need better SMRA returns so that our workers do not need to worry about not meeting the Cohort Minimum Sum every year and having nothing more than S$5,000 or less to withdraw at age 55."
Turning to the issue of the draw-down age, Mr Png said it should not be linked to retirement age or re-employment age. The draw down age for workers born in 1954 and later is 65. Mr Png argued that delaying the payouts for older workers "may cause undue anxiety and stress".
Based on the current life expectancy of 82.5 years, Mr Png said members would only enjoy payouts under CPF Life for at most 17.5 years - a shorter period than the Minimum Sum Scheme which is designed to last about 20 years.
To address this, Mr Png called for a third CPF Life plan, which would give workers a draw-down age of 60, enabling them "to go slow for whatever reasons."
"When we are young, we need a disciplined instrument like CPF to help us save for the future. But when we are old, we need a more flexible instrument to help us plan for the uncertainties of aging,” said Mr Png. “Issues like job security, health, mobility, et cetera cannot be taken for granted anymore. The current CPF Life plans do not offer older workers the flexibility to plan for an early or semi-retirement.”