Allowing Central Provident Fund (CPF) money to be used for other purposes such as housing, education, health care and investment provides greater flexibility for members, but creates a big hole in their retirement savings ("Be prudent when using funds" by Mr Jolly Wee; last Thursday).
While many would suggest the authorities offer higher interest rates for CPF monies, one has to be realistic: Higher returns may mean higher risk, and who is willing to bear that risk?
Others suggest working for longer so one can accumulate more CPF savings.
This would depend on the individual. Those who are healthy can continue working but what about those who are not in the pink of health and are unable to work?
To ensure more CPF monies are available for retirement, there is a need to review and tighten the outflow of funds.
For example, a person can take bank loans to pay for his children's tertiary education, instead of using CPF funds for that purpose. The children can repay the loans when they start working.
The authorities could also review the amount of CPF monies allowed for investment purposes, especially for those who have yet to accumulate substantial CPF savings. Most people would be better off leaving their hard-earned money in their CPF accounts than investing it.
Also, there is currently a cap on employee and employer CPF contributions. The authorities could explore raising or removing the limit, so that a worker who would like to contribute more to his CPF can do so.
As for medical expenses, the authorities can help by controlling rising health-care costs; the CPF member can do his part by taking up a suitable medical insurance plan to reduce the amount of CPF money withdrawn to pay medical bills.
Finally, one should note that it is no longer realistic to rely solely on CPF monies for retirement. Our savings accumulated during our active working years should help to fund our retirement.
Lim Lih Mei (Ms)
This article was first published on June 04, 2014.
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