SINGAPORE - About 40 people attended a forum on the Central Provident Fund (CPF) organised by the Singapore People's Party (SPP) yesterday, with most calling for more flexibility and transparency in the compulsory savings scheme, and higher interest rates.
In her opening remarks, Non-Constituency Member of Parliament (MP) Lina Chiam called on the Government to trust Singaporeans.
"There must be a balance between the need to protect people, and giving them freedom," the SPP chairman said.
She said the current interest rate of 2.5 per cent for savings in the CPF Ordinary Account is low compared to a return of about 7 per cent for some diversified assets.
"No one should be forced to buy an annuity," she said, referring to CPF Life, which is compulsory for CPF members born in 1958 or after and who have at least $40,000 in their Retirement Account when they reach 55, or $60,000 when they reach their drawdown age.
Those on CPF Life receive monthly payouts from their drawdown age, for as long as they live.
Mrs Chiam asked: "Why not allow citizens to use the Minimum Sum to choose from a variety of private annuity schemes?"
The Minimum Sum is the amount CPF members must set aside in their Ordinary and Special accounts on turning 55 for their retirement needs. It will increase from $148,000 to $155,000 from July 1.
"The Government can nudge people towards good options, but it should not just be a predetermined one," she said.
Besides more choices, the Government should be more forthcoming about how CPF formulas are calculated, said SPP assistant secretary-general Loke Hoe Yeong. "How are monthly annuities disbursed? Is the formula used the same for everyone? I don't believe that is in the public domain," he said.
Some in the audience said the Government should scrap the Minimum Sum altogether, and allow CPF members to withdraw their monies immediately.
But guest speaker and blogger Leong Sze Hian said this would spark a "liquidity problem".
"It would be a bigger disaster for any policy change to be a knee-jerk one," he said.
Audience members included activists Han Hui Hui and Vincent Wijeysingha, and blogger Roy Ngerng, who has been sued by Prime Minister Lee Hsien Loong for defamation.
Mrs Chiam's husband and former Potong Pasir MP Chiam See Tong was also present. Though physically weak, he spoke twice to criticise how complicated the CPF scheme has become and the audience applauded in response.
This article was first published on June 22, 2014.
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