Having options may be way to go regarding CPF minimum sum

On May 8, the Central Provident Fund (CPF) Board and the Ministry of Manpower announced that the CPF minimum sum will be raised to $155,000, up from $148,000, for those who turn 55 between July 1 this year and June 30 next year.

Of course, I fully expect grumbling when it comes to CPF and the minimum sum.

A year ago, there was a raise, from $139,000 to $148,000. And before that, in 2012, a raise from the then $131,000.

And yes, there were complaints then too.

This time, they were too loud for me to dismiss.

Mr Desmond Neo turns 55 in December. The senior engineer says: "I was hoping that I could withdraw my money to pay off debts instead of having to borrow from the bank.

"But with this, even though it is just $7,000 more, it is still money that I need."

Despite the best intentions to give citizens financial security in their retirement years, moving the CPF minimum sum remains deeply unpopular.

The minimum sum was first set at $80,000 in 2003, and was to be raised gradually until it reaches $120,000 (in 2003 dollars) by 2015. It has been rising since as Singaporeans live longer and inflation kicks in.

I kept hearing the same gripe during my heartland jaunt: Why raise every year? At this rate, will we ever see our money?

Mr Darryl Chan, 53, a driving instructor, says: "They have raised the minimum sum every year. I turn 55 in another two years and I dare not even calculate how much more they would increase the cap.

"At this rate, will I live long enough to enjoy the money that has been supposedly set aside to help me after I retire?"

Opposition party Singapore People's Party (SPP) has called for alternative retirement schemes, in response to President Tony Tan Keng Yam's address on Friday night.

It said in a statement yesterday: "Raising the CPF minimum sum is not the only way - it makes retirement tougher.

"Many Singaporeans are also deeply unhappy about the compulsory annuity CPF scheme. We need alternative retirement schemes to build an inclusive society."

But it is not that people are unhappy about the CPF scheme - everyone I talked to said it is a good way to enforce savings.

It is the inability to withdraw their money that irks them.

It is part of my journalistic training to see the whole picture.

And I am heartened how in his Parliamentary address, Dr Tan outlined plans where CPF savings and annuities will be improved.

There are plans too for Singaporeans to unlock the value of their homes. Safety nets are also to be improved so the vulnerable and elderly will be able to cope.

All good, right?

But most people are reacting, without seeing the full picture. Many want to have a choice, even if it is an opt in or out clause when it comes to their own hard-earned cash.

And in this day and age when people see online reactions first before getting the full picture, it is even easier to start grumbling about the "unfairness" of it all.

Do not get me wrong. I admit I wonder how the minimum sum will impact me when I hit 55, another nine years from now, and if it will be so high that I will not get to withdraw a single cent after working all these years.

But I have come across countless cases of retirees gambling away their CPF savings and of those who have lost their nest egg to unscrupulous people.

It is good to have some control.

These ideas may help:

First, it is time to spend as much effort as was put in to tell people about the Pioneer Generation Package into telling people the reason the CPF minimum sum was raised.

Then (this may seem radical) give people the choice to opt out of the recommended minimum sum. Of course, explain to them that this means if there is a shortfall in cash, not to expect handouts or subsidies.

Most people will then think carefully if the minimum sum is the way to go, to invest their money or spend it if they do not expect to live long.

This article was published on May 18 in The New Paper.

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