Govt looking at ways to boost retirement funding

SINGAPORE - Improvements to the Central Provident Fund (CPF) scheme could include raising older worker contribution rates further, linking payouts to inflation and finding better ways for the elderly to unlock the value of their flats.

Senior Minister of State for Manpower Amy Khor said these ideas, which have been raised by MPs, will be included.

The assurance came on the second day of debate on the President's Address, amid calls from backbenchers to improve retirement adequacy.

"I acknowledge that it is not a perfect system, and I assure (MPs) that we will continue to review how else we can improve it, taking into account feedback and suggestions," Dr Khor said yesterday.

Earlier, Ms Tin Pei Ling (Marine Parade GRC) had urged "a higher rate of return on our CPF monies", continuing a theme which was raised on Monday by other legislators.

She also wanted more flexibility for the use of CPF money, to let those "in dire straits" address pressing needs, such as their children's education.

This might mean "a higher risk that some Singaporeans will not have enough in their old age", she acknowledged. But those cases are likely to be in the minority, she added.

Several suggestions were also given by Senior Minister of State in the Prime Minister's Office Heng Chee How.

CPF savings can be strengthened by putting more money into accounts, such as by raising contribution rates or the contribution ceiling, he said.

Alternatively, such savings can be made to "work harder", such as by ensuring that the "best possible preferential rates are used".

He renewed his call for the re-employment age ceiling to be raised from 65 to 67, as one way to increase CPF savings.

Firms must now offer re-employment to workers who turn 62, up to age 65. Mr Heng, who is deputy secretary-general of the National Trades Union Congress, has long pushed for this ceiling to be raised to 67. "This is to give older workers who wish to do so such a choice," he said.

In reply, Dr Khor noted that the tripartite committee looking at this move is also taking the chance to review related issues. These include guidelines on wage adjustment upon re-employment, and updating the tripartite guidelines.

"We are finalising the proposals with our tripartite partners and should be ready to share these plans later this year," she said.

She also addressed "misconceptions" about re-employment.

"Raising the re-employment age does not mean that we do not want Singaporeans to retire," she said. "It means that we want to help those who wish to continue working to be able to do so."

This article was first published on May 28, 2014.
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