‘Optimistic’ about younger workers’ CPF savings, concerned about senior retirees’: Tan Chuan-Jin

Manpower Minister Tan Chuan-Jin said his ministry is “optimistic” about the ability of younger workers in Singapore to meet the minimum sum that ensures regular income for Central Provident Fund members from age 65.

Speaking in Parliament on Tuesday to address questions about the CPF, Singapore’s social security savings system, Tan attributed reasons for the optimism about younger workers to the increase in wages and labour force participation, as well as enhancements to the CPF system.

He also noted that more CPF members in each cohort turning 55 years old have been able to meet their minimum sums.

Meanwhile, Tan said that the ministry is concerned about seniors who are currently in retirement, as many of them have low CPF balances due to lower wages in the past.

The low balances are also because more liberal withdrawal rules which were calibrated for shorter life spans depleted the seniors’ CPF savings, he said.

In response to a question by Member of Parliament Seng Han Thong, who asked whether more flexibility can be exercised for CPF members to pay for housing loans, Tan explained that the ministry has exercised flexibility when a case merits it.

However, Tan did not think that the ministry would want to make this flexibility automatic for members as the ministry did “not want to encourage rash and imprudent housing purchases” by members.

Will draw down age rise again?

In response to a question posed by MP Ang Wei Neng about whether the draw down age will be increased when the re-employment age goes up, Tan said that the ministry is studying it.  

The draw down age is currently set at 63 and will be raised to 65 by 2018.

“Whether it needs to be raised further will depend on life expectancy and the need to maintain retirement payouts at a reasonable level. We have not reached any conclusions yet,” the minister said.

Several MPs raised questions about the CPF as the system has savings system has become a hot topic in recent months.

In early May, the government announced the increase of the minimum sum for those turning 55 from 1 July 2014 onwards. The sum was previously set at $148,000.

A month after the increase was announced, about 3,000 people gathered at Hong Lim Park for a CPF protest. Speakers such as blogger Roy Ngerng attended to call for more transparency and flexibility of the CPF system.