The Manpower Ministry has started a review of the Central Provident Fund Investment Scheme (CPFIS), and people can expect something in the next 12 months, Manpower Minister Lim Swee Say said yesterday.
The CPFIS is one of three options CPF members will have to grow the interest on their savings, apart from leaving them alone to earn risk-free interest, or opting for the new Lifetime Retirement Investment Scheme (LRIS), an in-between option with medium risk and returns.
The LRIS, proposed in August by a panel reviewing the CPF, will take a longer time to roll out, but the process has begun, he said.
"We're moving towards putting in place all three options for members to grow their interest - either through the CPF risk-free interest rate, revamped CPFIS or LRIS," Mr Lim told reporters after a dialogue with grassroots leaders.
Plans to review the CPFIS were announced last month by Deputy Prime Minister Tharman Shanmugaratnam, who noted that most members would have been better off leaving their funds in their Ordinary Account, with a guaranteed interest rate of 2.5 per cent each year.
The CPF Board is educating people about the changes at events like yesterday's dialogue. Organised by the People's Association, it is part of a series for grassroots leaders to learn about policies so they can better explain them to residents.
Last month, the panel reviewing the CPF also proposed an escalating payout option for CPF Life, to help those worried about inflation.
Mr Lim said the feedback was that "people find the CPF system is getting harder and harder to understand". As a result, when deciding on which CPF Life plan to adopt, some people were confused.
"Like Pokemon, the CPF system is evolving over the years... because the needs of CPF members keep changing," he said. But the core purpose of the CPF has not changed: CPF savings are meant for basic retirement, housing and healthcare needs - not for financial emergencies, and definitely not for luxuries.
This is why the scheme does not allow people to withdraw their money as and when they want.
Neither does the CPF allow people to postpone getting a monthly allowance until say, age 80, so they can take advantage of the higher interest rates offered to save more money for the finer things in life.
"The scheme addresses very basic retirement. So if everybody wants to eat shark's fin every day, that's not of concern to the CPF. We worry about the masses," he added.
For now, the main misconceptions stem from people misunderstanding what the savings are for, Marine Parade grassroots leader Nicholas Cheong, 53, told reporters.
"The main grouse is, 'It is my money; why can't I get to decide how I want to use it? If an emergency comes along, why can't I use it for that emergency? After all, it's my money'," said Mr Cheong of the feedback he has received.
Addressing this concern at the dialogue, Mr Lim said: "The CPF was not set up to take care of financial emergencies. That's why we will not modify the CPF system to allow quick withdrawals to overcome a crisis, and then later top up again."
He also explained the different payout levels for the CPF Life annuity scheme, which pays out monthly lifetime allowances for members.
These options were kept as simple as possible while being tailored to different needs, he said, likening them to "laksa, chicken rice and nasi lemak". "I cannot say which is better for you, because it depends on what you're looking for," he added.
"We don't know how long each one of us will live... The purpose of the CPF Life is for us to pool our risk... At the end of the day, you buy insurance because you have no idea (what the future is)," Mr Lim said.