Perhaps a pooled fund for those hit by financial woes, called the CPF Compassion Fund, could be set up to address concerns of Singaporeans over the Central Provident Fund's Minimum Sum.
Singaporeans who have depleted their CPF savings and are in financial difficulty can then tap this fund for monthly subsistence.
Singaporeans can contribute to the new fund in this way: Allow CPF members to withdraw their retirement fund, half the amount at age 55 and the balance at 65; however, at each withdrawal, 5 per cent must be left behind, up to a total sum of $10,000. This sum will then be transferred to the common compassion fund. The Government should match contributions dollar for dollar to build up this new fund.
To qualify for subsistence payouts from the new fund, Singaporeans will have to be aged 65 and above and show proof of having no cash or physical assets.
Those who hit 85 and have not drawn on the compassion fund should be allowed to ask for their contributions to be returned to them.
However, one's contributions, if not withdrawn from the new fund, cannot be passed on to the next of kin or nominees after the CPF member's death.
The money will remain in the compassion fund to help the rest of society.
CPF members should be allowed to opt out of the compassion fund and continue with the current system, which requires them to maintain a minimum sum, currently set at $155,000. Hopefully, my suggestion will allay concerns about the state being burdened should Singaporeans squander their CPF savings, as well as allow the original terms of the scheme to be honoured.
Tan Kok Tim
This article was first published on June 13, 2014.
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