Proposals on CPF payouts, returns will take more time

The Central Provident Fund (CPF) Bishan Service Centre.
The Central Provident Fund (CPF) Bishan Service Centre.ST PHOTO: JAMIE KOH

'Complex investment issues' lead to new target deadline - by first half of this year

Proposals to improve Central Provident Fund (CPF) payouts and returns, targeted to be ready by mid-2015 and deferred till late last year, will now only be ready by the first half of this year.

The Ministry of Manpower told The Straits Times yesterday that these recommendations by a government-appointed panel will take more time to prepare because "investment issues are technical and complex".

In February last year, the CPF Advisory Panel recommended tweaks that included letting CPF members tailor different levels of savings and payouts. It said then that proposals to boost returns and payouts were in the works and would be ready by the middle of last year.

 

In July, panel chairman Tan Chorh Chuan said that the process would take longer and a new date was set for the end of last year.

Yesterday, the Manpower Ministry gave a new deadline - the first half of this year. The ministry spokesman, who was responding on behalf of the review panel, would not be drawn into giving a more specific timeframe.

"As investment issues are technical and complex, the panel has taken more time to study this issue in depth," the spokesman said.

The 13-member panel was appointed in September 2014, after Prime Minister Lee Hsien Loong announced the CPF system review in his National Day Rally speech. The panel... was directed to study how the compulsory scheme could give members more say and greater security in retirement.

"This includes engaging the services of an independent consultant to assist with the modelling for the various investment options being considered," he added.

The extra time will also allow the panel to study feedback from focus group discussions and industry consultations, the spokesman said.

The 13-member panel was appointed in September 2014, after Prime Minister Lee Hsien Loong announced the CPF system review in his National Day Rally speech. The panel, which consists of academics, financial experts and representatives from unions, the social sector and the grassroots, was directed to study how the compulsory scheme could give members more say and greater security in retirement.

One area under study was how the Minimum Sum should be adjusted to give members better monthly retirement payouts for life. Another area is enabling bigger lump-sum withdrawals upon retirement.

Last February, the panel recommended letting members set aside three different sums at age 55 - a basic sum of $80,500, a higher sum of $161,000 or an enhanced sum of $241,500 - giving them monthly payouts of between $650 and $1,900 from age 65. It also recommended a lump-sum withdrawal at age 65 of up to 20 per cent of CPF savings. The Government has implemented the changes.

The delay in the second set of recommendations did not faze Government Parliamentary Committee for Manpower chairman Patrick Tay.

"Retirement adequacy is an important issue," said Mr Tay. "It is more important that the panel puts together a robust system that meets the needs of Singaporeans."

A version of this article appeared in the print edition of The Straits Times on February 03, 2016, with the headline 'Proposals on CPF payouts, returns will take more time'. Print Edition | Subscribe