Proposals to boost CPF payouts not ready yet

Pedestrians outside the CPF Building at 79 Robinson Road.
Pedestrians outside the CPF Building at 79 Robinson Road.PHOTO: ST FILE

Proposals to boost Central Provident Fund (CPF) payouts and returns will be unveiled only in a few months' time.

They were supposed to be ready by the end of this month, but have been delayed again. It is the third time the government-appointed CPF Advisory Panel has failed to meet its own target.

In February last year, the panel recommended changes that included letting CPF members tailor different levels of retirement savings and payouts. It also said then that proposals to improve returns and payouts were in the pipeline, and would be ready by the middle of last year.

But in July, panel chairman Tan Chorh Chuan said the process would take a longer time as investment options are more technical, and a new date was set for the end of last year. The deadline was not met and the Ministry of Manpower (MOM) said in February this year that the new target was end-June.

But the target looks set to be missed for the third time.

MOM said last week that the panel "is working towards submitting its recommendations within the next couple of months". The ministry, responding on the panel's behalf, declined to specify the new target date.

Asked about the delay, MOM said the panel took a longer time because of work in three areas: gathering feedback from the public and the financial industry, studying the feedback, and conducting "detailed literature reviews" of retirement investment schemes overseas.

"This has taken more time as investment issues are technical and complex, and thus require careful deliberation and review," said MOM, adding that the panel is now "wrapping up" its study.

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.

Comprising academics, financial experts and representatives from unions, the social sector and the grassroots, it 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 was enabling bigger lump- sum withdrawals upon retirement.

In February last year, 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.

On the delay, Government Parliamentary Committee (GPC) for Manpower chairman Patrick Tay said: "It is not something that we should rush. I'd rather that we take time and get it right."

He added that public expectations on improving CPF payouts and returns are high as they affect retirement savings. He also urged the CPF Board to educate its members when changes are made.

Mr Zainal Sapari, deputy chairman of the GPC for Manpower, urged the CPF Board to educate members on the risks involved in investing CPF savings as well. He said: "What is the point of giving higher returns when people invest on their own, only to realise later that they are worse off than leaving the savings with the CPF Board?"

A version of this article appeared in the print edition of The Straits Times on June 28, 2016, with the headline 'Proposals to boost CPF payouts not ready yet'. Print Edition | Subscribe