Parliament: Raise re-employment age ceiling to improve CPF savings, says Heng Chee How
Published on May 27, 2014 2:41 PM
SINGAPORE - Renewing his call for the re-employment age ceiling to be raised from 65 to 67, Senior Minister of State in the Prime Minister's Office Heng Chee How said that would help increase Central Provident Fund savings and hence retirement adequacy.
That was one of many methods which he listed to strengthen CPF savings: either by maximising the flow of money into CPF accounts, or by making such savings "work harder".
Firms are now obliged to offer re-employment to workers who turn 62, up to 65. But Mr Heng, who is also deputy secretary-general of the National Trades Union Congress, has long called for this to be raised till 67.
"This is to give older workers who wish to do so such a choice," he said yesterday during the second day of debate on the President's Address. These additional working years mean additional years of salary to increase their savings, he said.
A tripartite committee is discussing when and how to raise the re-employment age ceiling, but an ongoing survey by the NTUC has shown that out of 313 unionised companies, 75 per cent are employing workers beyond the age of 65, including 60 per cent which do so as the norm. Said Mr Heng: "I am optimistic and convinced that that a calibrated move from 65 to 67 is doable."
Other ways he suggested to increase CPF savings included raising base pay, minimising unemployment through measures such as skills upgrading, raising CPF contribution rates, ad hoc top ups, and raising the CPF contribution ceiling to help those who earn more, save more.
As for making CPF savings "work harder for the worker's retirement", the Government should keep an eye on the interest rates on savings "and ensure that the best possible preferential rates are used to aid retirement adequacy," he said.
Payouts for CPF Life annuities could also be improved and the Government should periodically review how funds are allocated across the different accounts, he added.
It is also important to remind CPF members of how this allocation changes across time. For instance, many may not remember or may not know that they can pledge their property to make up to 50 per cent of the Minimum Sum at age 55, hence reducing the need to transfer their Ordinary Account savings into the Retirement Account to make up this sum.
"The communications and administration of aspects like these would help smoothen the process for many," said Mr Heng.