Allow partial lump sum withdrawals and voluntary Minimum Sum top-ups: CPF panel

A small group interview with CPF Advisory Panel chairman Tan Chorh Chuan, who is also NUS president. The panel reviewing the Central Provident Fund (CPF) is expected to push for people to be allowed to make lump sum withdrawals from the retirement fu
A small group interview with CPF Advisory Panel chairman Tan Chorh Chuan, who is also NUS president. The panel reviewing the Central Provident Fund (CPF) is expected to push for people to be allowed to make lump sum withdrawals from the retirement funds. -- ST PHOTO: AZIZ HUSSIN

SINGAPORE - A panel reviewing the Central Provident Fund (CPF) is expected to push for people to be allowed to make lump sum withdrawals from the retirement funds.

The Government appointed panel will also ask the Government that those who want to pump in more savings to enjoy higher payouts be allowed to do so.

But while the panel is not calling for the Minimum Sum to be adjusted upwards, it pointed out that amount will continue to rise.

This is because savings need to keep pace with rising prices and standards of living so that payouts remain adequate, said Professor Tan Chorh Chuan, who heads the CPF panel, in a media briefing on Friday.

"But the rate at which it will go up will not be as high as what we've seen in the preceding 10 years," he said.

Giving a preview of the recommendations that the panel will be submitting to the Government next week, Prof Tan said that the panel considered three factors: whether the CPF system is adequate and flexible for retirement needs, and whether it is simple enough for members to understand.

"The system really is not very easy to understand," he said.

For its first set of recommendations, which will focus on the Minimum Sum and lump sum withdrawals, Prof Tan said that the panel is not expecting that the Minimum Sum stay at the $161,000 level, which is the sum declared for those turning 55 from July this year.

The Minimum Sum will have to increase to adjust for inflation and Prof Tan hopes that using longer term inflation rates to adjust the Minimum Sum will reduce short term fluctuations and make planning easier for CPF members.

Prof Tan also revealed that the advisory panel is looking to ask the Government that allow people to top up their CPF beyond the Minimum Sum so as to enjoy higher payouts. "It's an option to put in more money if you want to. But if you didn't want to, you don't have to."

For people who want the flexibility to withdraw more from their retirement accounts, Prof Tan had good news.

CPF members should be allowed to withdraw a lump sum of about 20 per cent of their CPF savings at age 65, even if they have not met the Minimum Sum, he said.

But the panel will not push for early withdrawals at age 55 for this group.

"It is best that... the option to withdraw is made at a time when you also decide on your long-term payouts. Early withdrawals will not meet that purpose," said Prof Tan.

The panel will also give suggestions on how to help CPF members who have not met the Minimum Sum, as well as freelancers and housewives who have lower CPF savings.

He credited some 400 Singaporeans who attended the 10 focus group discussions and bodies such as the National Trades Union Congress and Singapore Actuarial Society for giving their views.

"The panel has benefited a great deal from listening to the views and perspectives from a very wide range of Singaporeans."

The 13-member panel was formed in September last year to review some aspects of the CPF system, such as the Minimum Sum, withdrawals, payouts and boosting returns.

Asked if the he was confident that his panel's proposals will be accepted, he said that the Government "will seriously consider" all of them.

A second set of recommendations on CPF payouts and returns will be submitted to the Government in the middle of the year, said Prof Tan.

tohyc@sph.com.sg