118% increase in Minimum Sum over 13 years

By SY Lee and Leong Sze Hian

We refer to the article ”Singapore Parliament reopens: CPF schemes for retirement to be improved, says President Tony Tan” (Straits Times,  May 17).

CPF schemes to be improved?

It states that ” Among the Government’s goals in its second term is to ensure that Singaporeans are adequately prepared for retirement, with enough savings to tide them through their golden years. The CPF schemes are meant to be a way to build up retirement funds.”

ES alerted us to page 19 of the 2001 CPF Annual Report.

Higher proportion of members meeting the minimum sum?

It states that ”In 2001, 36,816 members were brought into the Minimum Sum Scheme.

Of these, 5,827 bought annuities, 13,373 pledged their properties and 14,433 left their Minimum Sum either with the banks or the Board.

The remaining 3,183 consisted of members who had no Minimum Sum to set aside as they had small balances, and those who were exempted from the scheme because they were terminally ill, had passed away, had their own annuities, had left the country permanently or were pensioners in receipt of a monthly pension.”

As we understand and estimate that each age 55 cohort is about 40,000 – it would appear  that most of the cohort who turned 55 were in the minimum sum Scheme.

Now only 1 in 8 can meet entirely in cash?

Now, fast forward to today –  and we estimate that only about 1 in 8 who turn 55 will be able to meet the combined total of $198,500 for the CPF and Medisave Minimum sums.

Why is it that apparently lesser Singaporeans seem to be able to meet the minimum sums?

118% increase in 13 years?

Of course that should be the case, as the minimum sum was only $70,000 in July 2001 ( Medisave Minimum Sum of $21,000).

It has increased by 118% in 13 years to a combined total of $198,500 now, or 6.2 % per annum.

 

Refer to the 2001 report here, this annual report is no longer available on the CPF website. 

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