Pension systems, globally recognised as being crucial to the economic stability and social security of nations as their populations age, are lightning rods for fiery debate and divisive politics in many places. This is the case especially when outcomes are socially woeful and demands are financially unsupportable. Against this backdrop, the Central Provident Fund scheme, a bedrock of Singapore society since 1955, ranks among the safest in the world. Yet, it has not been spared of public angst either - as seen when the "Howe Yoon Chong report" touched a nerve in 1984 by proposing to raise the withdrawal age of CPF money from 55 to 60 years. Lately, the Minimum Sum, which has been around for years, has been the subject of much agitation too.
The policy rationale of the measures is sound. As many would not have planned and saved sufficiently for old age, the state has to ensure every senior has enough money to sustain him or her during retirement, even as costs rise inexorably and better health care extends lifespans. The irony is that such paternalism, however well-intentioned, can at times give rise to misgivings and misperceptions of astonishing proportions.
In earlier times, political efforts to prepare for the inevitability of the "silver tsunami" was seen as a betrayal by unreasonably delaying the payment of precious CPF savings. Of late, the entire CPF scheme has been unfairly labelled a scam for paying so-called paltry returns and the Minimum Sum a ruse to keep people from laying hands on their nest-eggs. Yet, as a key institution that touches the lives of all, the CPF system is an open one with many channels that offer accurate information and guidance to users.
However, public understanding of details of the scheme is clearly deficient, based on the findings of a survey by Government feedback unit Reach. For example, almost two-thirds are not aware their properties can be pledged to help meet the Minimum Sum. Hence, one should not take it for granted that many are familiar with even general aspects like how CPF monies are invested and what constitutes a fair return. Deputy Prime Minister Tharman Shanmugaratnam and Manpower Minister Tan Chuan-Jin took pains to present the facts about CPF in Parliament on Tuesday. These will have to be communicated to different audiences in terms they can readily appreciate.
Certainly, one cannot expect national savings schemes to operate in starkly simple ways, especially when financial markets are complex and a primary objective is to protect people's savings from unwarranted risks. Hence, the importance of renewing efforts to make the intricacies of CPF clear to ordinary citizens.