Mention of the Government's intent to enhance the Central Provident Fund scheme, set out in a parliamentary addendum up for debate, is sure to excite expectations when rising costs, squeezed savings and the wealth gap add up to an unpropitious conjunction. The concern among older members about an "affordable" retirement is well founded, as about half of them are short of the Minimum Sum at age 55.
The CPF model sparks intense debate here from time to time. But some foreign analysts studying viable retirement options have lauded "the culture of self-reliance" the scheme has imbued, as one Washington Post columnist noted. Keeping a reality check on calls for higher employer contributions and interest rates is part of the remit of CPF trustees. They have to constantly weigh the balance of interests between business viability and Singaporeans' employability in keeping rates within reason.
In 2003, then Prime Minister Goh Chok Tong raised the competitiveness factor to argue why Singapore could not return to a 40 per cent total quantum, split evenly between employer and employee. (It is to rise to 37 per cent for workers up to age 50.) In affirming in Parliament early this year that the rationale had not changed, Manpower Minister Tan Chuan-Jin spoke of Workfare concessions and occasional top-ups, an extra 1 per cent interest on the first $60,000 of balances and progressively better contribution rates for older workers as other ways of reinforcing retirement adequacy. The last Budget provided for Medisave increments and better employer rates for those aged above 50.
So, how is the scheme to be tweaked going forward? Simply returning CPF to its founding premise of providing for basic retirement is not sound, as help for housing creates opportunities to rent a room or tap the Silver Housing Bonus, which serve as other ways to address retirement fund shortfalls. While part of CPF savings can be withdrawn at age 55, the Minimum Sum has had to be increased annually to take account of inflation and longer lifespans. It makes sense to keep this in place, too.
Bigger issues are how to help workers plan for retirement, cater to groups with low CPF balances, and help those who are not part of the workforce for various reasons like family needs and disability. The pioneer generation who had not grown sufficient savings, during an era of low wages, will get a helping hand through a health-care package. Assistance for others deemed vulnerable will call for fresh approaches that deal squarely with basic needs while striking the right balance between self-responsibility, family support and state intervention.