THERE could be more options for Central Provident Fund (CPF) members in deciding how much they want to save, rather than a one-size-fits-all approach to retirement funding.
And driving the change is the focus on how much each individual needs, said Manpower Minister Tan Chuan-Jin.
“When you are looking at different levels of payouts, there are different amounts that they need to save and they need to keep in their CPF,” said Mr Tan, giving for the first time a hint of where the CPF review is heading.
Speaking to the media in a wide-ranging interview on manpower issues last week, Mr Tan said that the advisory panel set up by the Government in September to review the CPF should have its first set of recommendations ready by next month.
Ahead of the panel’s report, Mr Tan said that its thinking behind the CPF has shifted from the current approach, where the Government stipulates one Minimum Sum for all members, which is now $155,000 but will go up to $161,000 in July.
“So I think we are looking at perhaps various options and then tying those options to the differing amounts that you need to accumulate,” he said.
“We realised that that’s the thing because actually people do have different needs and people are looking at different requirements.”
The panel is also looking at how to prevent CPF payouts from being eroded by inflation, said Mr Tan. But he also warned that having too many options could over-complicate the CPF, already a complaint among many people.
Still, the panel is fully aware of the tensions over the CPF, with many people wanting more flexibility in using their savings.
“There are individuals who feel that this is my money and therefore why should I not be allowed to take it out,” Mr Tan noted.
“But I think the idea really is to help provide every individual with at least a basic savings plan of sorts, to allow them to be able to sustain for the long term.”
In the 90-minute interview, he also covered issues such as rehiring workers beyond the age of 65 and raising productivity.
The Government will use the law to compel companies to rehire workers until 67 in “two to three years”, he said, urging employers to use the official incentives, to be announced early next year, to make the transition.
On productivity, the minister warned that companies have to start adapting to slower manpower growth, which is expected to start as early as 2020. They “have to restructure, change the way they do things” so as to rely on less manpower, he said.
“The time to change is now.”
He is upbeat about the prospects for next year. The economic outlook remains positive, he said, adding: “When the economy is healthy, it means that companies can do well.”
While welcoming the idea of tailoring CPF savings according to payouts, economists warned of the risks involved.
“I worry that tilting towards greater flexibility in allowing differing Minimum Sums and corresponding payouts might mean that more people are caught with inadequate financial resources in old age,” said Singapore Management University labour economist Hoon Hian Teck.