CPF Retirement Sum Should Be Regularly Adjusted, But What About Those Who Cannot Afford?

As usual, the Government will once in a while send out sound bites to protect their cash cow that is the CPF, and the latest noise coming out of them is that the CPF Basic Retirement Sum should be regularly adjusted to ensure Singaporeans have enough money for retirement, seeing that inflation is playing a huge role in Singapore.

This was stated by Minister Josephine Teo, whose obscene salary means she will probably no need to set aside any retirement money, as her role as a Minister in the PAP government ensures she is well paid to retire anytime she chooses to. And now, she is telling Singaporeans that they do not have enough money for retirement and they should save more. Would Singaporeans not safe money if they could? Why is the Minister stating the bloody obvious?

What she failed to realise is that those who cannot meet the Basic Retirement Sum are usually housewives, those who have chronic illnesses and therefore works intermittently, gig workers and small-time self-employed who live hand-to-mouth, low-income workers who have to pay for a house during their most productive years, and those who have suffered a financial calamity. Is there anything the country can do for them instead of forcing them to come up with their own hard earned money just to deposit in a CPF account that cannot be used?

One thing Josephine Teo got right was that the inflation will render the Retirement Sum monthly payout years down the road “feel inadequate”. Then, why can’t CPF index monthly payout to inflation? That is to say, if inflation is 2% a year, then an initial monthly payout of $1000 at age 65 would be $1020 the next year and 10 years down the road, would be $1196. Then, it wouldn’t feel so “inadequate”.

In fact, the most glaring problem with CPF Life is that monthly payouts are fixed, even if the member lives another 40 years, as if prices of daily necessities is a constant. Is that fair, and is that a good policy?