As a central part of the nation's social safety net, the Central Provident Fund (CPF) scheme has indubitably fulfilled earlier expectations. However, changing times have prompted a review of particular aspects that have proven to be particularly prickly - the Minimum Sum and lump sum withdrawal upon retirement. Other areas, linked to payouts and investments, are under study but the first two are of critical importance as these impinge on the robustness of a social policy catering to the basic needs of all retirees, in particular the vulnerable.
In essence, less savings set aside for old-age support equates to a more precarious outlook, should one's personal circumstances turn sour later in life. The need for that buffer ought to have been embedded after almost 60 years of the CPF scheme. Nonetheless, many also see retirement savings as a prize to be relished, although doing so would degrade the safety net. Acknowledging this human foible and possible pressing needs, the review panel has recommended allowing the withdrawal of up to 20 per cent of retirement funds at age 65. Unfortunately, those of little means are conceivably the ones who would take out money, while those who are better off might opt to retain funds for the higher interest available from CPF.
Hopefully, the focus on lifetime payouts, highlighted by CPF Life and the panel's three retirement tiers, might take root among younger CPF members over time, helping them to see CPF as the foundation of a retirement plan and not the end-all. With rising incomes and home ownership - the other pillar of the nation's retirement system - there is cause for some peace of mind. Among CPF members turning 55 in 2020, about 7 in 10 active members are expected to meet the basic retirement sum specified by the panel.
At risk would be CPF members who do not have enough to meet even the basic sum and those like housewives who have never been in the workforce. The question that arises is how impecunious retirees can be helped. The CPF advisory panel has suggested the use of help schemes outside the CPF, eschewing suggestions that have been made for a basic state pension. Canada's Old Age Security programme is available even for those who have never worked and Britain offers pension credits for the poor. Paid for by taxes, such benefits can exact a toll on resources over time, unless tailored for specific groups and administered prudently.
Here, a Silver Support Scheme is to be rolled out to assist the vulnerable. And the panel has suggested incentivising top-ups for those with meagre CPF savings. This is a sound approach as socialising the cost of retirement entirely would dent the the role of the family in caring for seniors.