CPF could be even better with more flexibility

There has been much debate on the Central Provident Fund scheme recently, which led me to wonder: Is it really that bad?

My family has benefited from it. It helped my father, who earned modest wages, afford a four-room flat and put my younger brother through university. I, too, have been able to start a family in a five-room flat with the help of the scheme.

Of course, we must live within our means: If we earn only average wages but purchase private property or executive condominiums, then we would certainly exhaust our CPF savings and never reach the Minimum Sum.

The CPF is a good scheme, but I can understand why people are against it.

The Minimum Sum has been rising fast at a time when interest rates are low and well-paying jobs are scarce.

The raising of the drawdown age is also hard to swallow. The rationale for it is to enable Singaporeans to save more for their retirement as they are living longer.

The problem is that there is no promise we will be employed longer, so we may need the funds sooner. My father, for instance, was "retired" by a government-linked company at the age of 62.

Neither is there a guarantee that we will live longer.

The CPF is a great scheme, but we can make it even better with more flexibility.

The Minimum Sum should remain, and people should be allowed to contribute more to their Retirement Accounts if they want to.

At the same time, people should be allowed to choose their drawdown age from age 55. Reward those who delay their drawdowns, but offer flexibility to those who wish to enjoy a slower pace of life at an earlier age.

Lee Ju Guang

This article was first published on Oct 17, 2014.
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