Workers should be allowed to make a lump-sum withdrawal of at least 20 per cent from their Central Provident Fund (CPF) savings even if they do not meet the Minimum Sum, the National Trades Union Congress (NTUC) said yesterday.
The labour movement also wants the Government to raise the current ceiling of $60,000 that attracts an additional 1 percentage point in interest rates.
These two suggestions were among 15 proposals aimed at boosting CPF savings and giving CPF members more flexibility in using their own retirement funds, said NTUC assistant secretary-general Cham Hui Fong.
Even as the NTUC proposed major tweaks, she said the labour movement is not calling for a major overhaul of the system.
"The fundamentals of the system should remain. In no way will we want to convert it into a retirement (pension) benefits scheme," said Ms Cham.
"We have seen how it has evolved in other countries and how it has collapsed."
It has submitted the recommendations, based on views it gathered from 250 union leaders and workers at the end of last year, to the government-appointed advisory panel reviewing the CPF.
At the National Day Rally in August, Prime Minister Lee Hsien Loong said that the Government would consider letting CPF members make lump-sum withdrawals after they retire, but withdrawals should be capped and not too excessive.
Currently, members can withdraw only $5,000 from their CPF savings at age 55 if they do not meet the Minimum Sum.
Ms Cham said the NTUC supported PM Lee's call and it wants workers to have the flexibility of withdrawing a lump sum, "minimally 20 per cent", from their CPF accounts at the draw-down age, even if they do not meet the Minimum Sum.
At the same time, the Government should introduce financial incentives to encourage workers to continue keeping their funds in CPF accounts, said Ms Cham.
For older workers, who have their CPF rates cut as they age, the labour movement wants the CPF contribution rate of workers aged 50 to 55 to be the same as younger workers.
NTUC also suggested that the Government raise the CPF contribution ceiling from $5,000 to between $5,500 and $6,500.
To further boost savings, the labour movement wants the $60,000 cap on CPF savings that earn an extra 1 percentage point in interest rates to be doubled to $120,000.
Acknowledging that these could add to rising costs, Ms Cham said: "We have to be reasonable and fair to employees as well."
But former Nominated MP Eugene Tan said the recommendations do not go far enough in addressing retirement adequacy.
Only half of CPF members who turn 55 in 2013 met the Minimum Sum, including 15 per cent who pledged their properties.
"The CPF system cannot just do with tweaks, but also needs an urgent overhaul," said the former NMP, who is an associate law professor from the Singapore Management University.
Get MyPaper for more stories.