Toh Yong Chuan

Silver Support to boost social security net

The Silver Support Scheme, combined with the enhanced Central Provident Fund scheme, will go a long way in providing a steady stream of income for all retirees, including the less well-off. -- PHOTO: LIM YAOHUI FOR THE STRAITS TIMES
The Silver Support Scheme, combined with the enhanced Central Provident Fund scheme, will go a long way in providing a steady stream of income for all retirees, including the less well-off. -- PHOTO: LIM YAOHUI FOR THE STRAITS TIMES

Amid the range of changes affecting workers' retirement yesterday, one thing was clear.

The changes will put to rest one of the biggest worries facing Singaporeans - whether they can save enough for their retirement.

And a big part of why this is so is because of the introduction of the Silver Support Scheme.

Combined with the enhanced Central Provident Fund scheme, the Silver Support Scheme will go a long way in providing a steady stream of income for all retirees, including the less well-off.

Together with home ownership, affordable health care and Workfare, they complete what Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam calls the four pillars of social security.

The scheme is significant on three fronts.

First, it signals that no Singaporean will be left behind, even after retirement.

As Mr Tharman put it: "Just as Workfare tops up wages of lower-income Singaporeans during the working years, Silver Support will add to incomes in retirement."

Second, the scheme is the closest Singaporeans are going to get to receiving a retirement pension.

While it is not a pension, it has some features of it, such as quarterly payments for life as long as an elderly person meets the criteria.

And it is also a departure from past handout schemes, with the newest scheme aimed at not just the neediest.

The Silver Support will cover three in 10 retirees, including those living in larger five-room Housing Board flats.

Third, the scheme will continue to cover new batches of Singaporeans as they turn 65, unlike the Pioneer Generation Package which benefits a particular generation of Singaporeans.

It clearly plugs a gap in retirement income - by supplementing the CPF scheme when CPF savings fall short.

Still, while workers and retirees will cheer the CPF and Silver Support Scheme, the new policy has raised some questions.

One, if the Silver Support Scheme plugs the gap when CPF savings are inadequate, does it then mean there is no longer any need to raise CPF rates?

For workers 55 and younger, the total CPF contribution rate of 37 per cent from next January will exceed the 36 per cent cap previously set by the Government in 2003.

It has been more than a decade since the rates were last reviewed and adjusted.

The latest changes will pile pressure on the Government to review what these rates ought to be, a move which the labour movement has long called for.

Two, some may wonder: Who is going to pay for the Silver Support Scheme? Will it lead to a dependency mentality in which people will be less motivated to build their CPF savings during their working years or less cautious in spending their savings after they retire, knowing that they can fall back on the Silver Support Scheme?

The CPF has always been meant to look after the majority of workers. At the top end, high-income earners can fall back on personal savings and investments.

Now at the bottom, the social safety net looks more complete with the Silver Support Scheme.

tohyc@sph.com.sg