Too much of Singaporeans' Central Provident Fund (CPF) and life savings are being used for housing and other purposes besides retirement, said some MPs and observers yesterday.
There should hence be more options and flexibility for seniors to convert their assets into cash should the need arise, they added.
They were speaking to The Sunday Times a day after President Tony Tan Keng Yam's address to Parliament, when he said that the Government would do more to give Singaporeans greater peace of mind when they retire. The impending policy changes reflect retirees' worries of not having enough cash for their daily needs, said observers.
" As far as the older generation is concerned, retirement adequacy is something we need to pay attention to, particularly (to) the split between housing and cash to pay for their daily living," said Minister in the Prime Minister's Office Grace Fu.
Ang Mo Kio GRC MP Inderjit Singh was among those who felt that the balance was too heavily tilted towards housing.
This feeds into Singaporeans' worries as many may end up owning a valuable house but not having enough cash for retirement, said Professor Benedict Koh, director of the Singapore Management University's Centre for Silver Security.
In his address, Dr Tan said the Government would develop more options for Singaporeans to unlock their home value in their retirement. Current options include the Enhanced Silver Housing Bonus, which gives seniors a cash bonus when they downsize their flat; and the Lease Buyback Scheme, which lets elderly households sell part of the lease back to the Housing Board.
Earlier this year, National Development Minister Khaw Boon Wan indicated that the Government was considering extending the lease buyback to bigger flats and revisiting a reverse mortgage scheme.
Speaker of Parliament Halimah Yacob said yesterday that she expects the issue of whether existing schemes can be more flexible to be raised, when MPs debate the President's address from May 26. Noting the take-up rate of these schemes is "not that high", she said the Government will have to look at how to make them more attractive.
For example, the main drawback of reverse mortgage and lease buyback is the irreversibility, said R'ST Research director Ong Kah Seng.
ERA Realty key executive officer Eugene Lim and Nee Soon GRC MP Lee Bee Wah said seniors tend to prefer selling their bigger flats and moving to studio apartments with the lump sum they receive.
However, Dr Kang Soon Hock, head of the social science core at SIM University, said the low take-up rate should not be a deterrent to new monetising options. "In fact, seniors should be provided with as many viable options as possible so that when the need arises, they will be able to tap any of these schemes for assistance."
In his speech, Dr Tan also said the CPF savings and CPF Life annuity schemes would be improved.
Most observers agreed that CPF Life payouts should go up and be adjusted for inflation, but were divided on whether the reins on the use of CPF savings should be tightened or loosened.
"The CPF is used for too many purposes," said Asia Competitiveness Institute co-director Tan Khee Giap, adding that the role of CPF should evolve over time. Using it for housing should decrease with age, while the portion for retirement and health care should rise, he suggested.
Holland-Bukit Timah GRC MP Liang Eng Hwa said he hears many requests on the ground for multiple uses of CPF, but this must be balanced against the need to save enough to meet the minimum sum. A higher minimum sum will allow seniors to have a bigger annuity payout later and cover themselves against longer life expectancy, he said.
On the other hand, people do feel the pinch when the minimum sum is raised, as it was this month, said Mr Singh.
"We have to relook the use of CPF... I think we can refine it and go back to the basics, focus on retirement savings."
This article was published on May 18 in The Straits Times.
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