- POSTED: 26 May 2014 19:54
- UPDATED: 27 May 2014 08:56
Reducing concerns over rising CPF Minimum Sums, and reviewing measures to help the sandwiched class were some of the key issues debated in Parliament today.
SINGAPORE: The Central Provident Fund (CPF) scheme has served Singaporeans well, but it is also timely to review it in order to enhance retirement adequacy.
Several Members of Parliament made this point today (May 26) as they thanked the President for his address charting the government's agenda for the second half of its term.
Many MPs also spoke about the need to take care of the sandwiched class - these are middle-income Singaporeans, who fall under the Professionals, Managers and Executive (PME) group.
Among the proposals thrown up - find ways to reduce concerns over rising CPF Minimum Sums, and review property cooling measures to make it easier for more Singaporeans to upgrade their homes.
Kicking off the debate on the President's address was MP for Chua Chu Kang GRC, Zaqy Mohamad.
He acknowledged that the government has acted to address some problems at hand, such as housing, healthcare, transport, but said more needs to be done in the second half of the government's term.
A major concern for Singaporeans is retirement adequacy, and MPs welcomed the commitment to review the CPF system.
"We should find ways to reduce citizen's unhappiness with the changing 'goal-posts' of the Minimum Sum amount," said Mr Zaqy.
"Only half of Singaporeans today are able to meet their Minimum Sum. Thus, I can certainly understand the anxiety and fear given the barriers."
Said Mr Zaqy: "So much of the frustration I encounter with the Minimum Sum or the Retirement Account after a certain age is due to the inflexibility when one falls into difficulty in the use of funds to pay for mortgage or change in property, especially if they have lost their job, or are required to take a lower pay or have drawn down their CPF fully, in their senior years."
"I hope that a comprehensive review can provide a more positive outcome for the CPF to provide better retirement adequacy".
Mr Zaqy suggested new ways to improve returns on CPF savings. He said this could be in the form of a Government-backed investment plan that has higher interest rates and accounts for inflation.
"Perhaps the CPF can consider a Government-backed investment plan that tracks inflation, above the existing Ordinary Account and Special Account interest rates. The existing CPF-approved investment funds are left to the market, which often has certain financial risks beyond the understanding of the ordinary CPF contributor," he explained.
"A Government-led plan may come somewhere in between, in that it is a trusted plan, with standard terms and the objective of tracking inflation to protect one's savings for the long-term."
MP for Holland-Bukit Timah GRC Liang Eng Hwa lauded the CPF system. Without it, he said, some "may not save enough for their retirement, we will have much lower home ownership and hospitalization expenses could result in more cash outlay without Medisave savings, not to mention enough savings for the children education".
"If we did not have a CPF and want to introduce it only today, in 2014, the proposal would likely be drowned out by a major uproar."
But with the CPF system in place, "we have the flexibility today of reforming the system one way or another, to better meet the needs of this generation as well as that of aging population," he said.
"I fully support further improving the CPF savings and the CPF life annuity schemes, as well as developing more options for Singaporeans to unlock the value of their homes."
One of the MPs who spoke on the needs of the middle-class was Ms Foo Mee Har.
"The Government's efforts to provide stronger safety nets are clearly felt amongst the lower income and elderly Singaporeans. However, the same cannot be said for middle-income Singaporeans and professionals, managers, and executives (PMEs)," she said.
"They are neither rich, nor poor, nor old. They struggle to cope with Singapore's rising costs of living. They feel intense pressure from competition for jobs. They feel most vulnerable to being made redundant, and with few safety nets to catch them should a spouse lose his/her job, both usually end up working long hours just to keep employed."
"Many of them feel that their pathways upwards are constrained, and that the Budget announcements have little impact on their lives. Their aspirations to upgrade their quality of life -- whether with a house or a car -- now feel further out of reach with the imposition of recent housing and car policies," Ms Foo continued.
She suggested that some property cooling measures be reviewed, to make it easier for more Singaporeans to upgrade their homes.
The Additional Buyer's Stamp Duty (ABSD), for example, could be collected upon the completion of a new property rather than upfront, so genuine buyers do not face cash flow constraints, she suggested.
And if a genuine upgrader sells his first flat within a certain period, Ms Foo said he should not need to pay the additional stamp duty at all.
Ensuring that the skills of PMEs remain relevant as the economy restructures was another recurring theme.
MP for Nee Soon GRC Patrick Tay suggested the expansion of the Workforce Skills Qualifications framework to focus on PMEs, and not just rank and file workers. He also proposed greater access to funds for adult learning.
"If all great athletes have great coaches and mentors, why should we not extend this to our PMEs with a ready menu of training programmes to sign up for, and mentors and coaches to help them navigate and negotiate the challenges?" he asked.
He also urged a review of the current absentee payroll, which is pegged at the same rate as rank-and-file.
"It is implausible for employers to release their PME staff for training as the salary portion to be recovered is insufficient. Besides, our current offerings are confined to different industry verticals and may well lack sufficient choices to inspire our PMEs," Mr Tay said.
MPs also spoke about heart being at the centre of government policies.
They say it is no longer just about hardware and infrastructure. Rather, it is about selling government policies in ways that can win the hearts and minds of an increasingly demanding electorate.