Parliament: Government has been looking at enhancing CPF Life "for a long time"
Published on May 29, 2014 6:30 PM
SINGAPORE - The details of enhancements to the CPF Life annuity scheme will be ready around August, when Prime Minister Lee Hsien Loong will deliver his National Day Rally, Manpower Minister Tan Chuan-Jin told Parliament on Thursday.
The Government has been looking at how to improve the scheme "for a long time", he said, a day after Mr Lee said the aim is for CPF Life payouts to keep pace with rising costs of living.
As life expectancy increases, the focus of CPF is "to ensure that we can live long but we can live well as well," said Mr Tan, who gave an overview of the different needs for which the CPF scheme must continue to cater.
One is housing, both at an early stage of life and in later years. Noting that some have questioned whether the CPF should even address housing adequacy, Mr Tan said: "We believe that it's an important component."
Another aspect is healthcare. Along with the Pioneer Generation Package, for instance, the CPF system is one way in which the Government is "looking out for the healthcare needs of the people", he said.
Third is retirement adequacy. Here, helping workers earn good wages and making sure jobs are available will help them build up funds for retirement. Another way to help is by giving workers the chance to work longer if they choose to do so.
"Raising the retirement age isn't about forcing people to work longer," he stressed. "If you don't want to work longer, you can actually stop working any time that you wish to." But many do find that work is a part of active ageing, so allowing people to keep working is important, he added.
Mr Tan also acknowledged MPs' concerns over whether CPF returns are adequate, but said the question was where an increase should come from.
"Some have asked whether CPF interest rates should be higher in order to withstand inflation. That's a fair consideration." But others have suggested seeking higher returns by taking on more risk, he noted: "Is that something we want to do?"
The CPF interest rates provided today are already "far higher than equivalent rates provided by similar products in the market today". Nonetheless, this is an area the Government is looking at when enhancing CPF Life, he added.
Mr Tan also addressed Workers' Party MP Png Eng Huat's (Hougang) suggestion that CPF members should have the option for CPF Life payouts to start at an earlier drawdown age of 60, instead of 63 now.
Mr Png had spoken of his father's excitement about turning 55 and being able to withdraw CPF savings. But such excitement could "turn into a look of horror" if the drawdown age is not adjusted as life expectancy increases, and CPF members see their money beginning to run out, said Mr Tan.
"The more you draw out earlier, what it means is that the payouts correspondingly will reduce," he added.