Entice non-salaried Singaporeans to contribute to CPF

The CPF logo at the CPF Bishan Building.
The CPF logo at the CPF Bishan Building.PHOTO: ST FILE

As a greater percentage of Singaporeans take on non-salary based engagements as their primary source of income, the Central Provident Fund (CPF) Board needs to entice this group to make CPF contributions.

Having them commit to their own retirement and healthcare adequacy will facilitate self-sufficiency when they are older.

This group is likely to place a higher value on the liquidity of their assets. They are likely to be more entrepreneurial and will evaluate the trade-offs of locking in their money for retirement and having it available for their own business plans.

CPF contributions do have features that are attractive to non-salaried Singaporeans. CPF contributions are non-taxable, and also protected from creditors in the case of bankruptcy. However, these features are not attractive to the majority of the group as they are not paying high income taxes nor are they taking huge risks.

CPF has to offer a chance of a higher return, or have greater flexibility in usage for it to be deemed as a better store of wealth.

The recommendation made by the CPF Advisory Panel in August 2016, to give Singaporeans a low-cost, fuss-free, passively managed investment option, was in the right direction.

The CPF Board should have quickly implemented the advisory panel's recommendation, given that such investment options and structuring have been successfully implemented overseas.

The CPF Board can also work with the Inland Revenue Authority of Singapore to help non-salaried Singaporeans quantify the benefits of CPF contributions and participation in CPF Life. This can be through the use of online calculators, more targeted outreach and education.

Let's ensure that CPF is relevant to all Singaporeans in this fast-changing employment landscape, and leave no one behind.

Chiam Sheng Shi

A version of this article appeared in the print edition of The Straits Times on August 20, 2019, with the headline 'Entice non-salaried Singaporeans to contribute to CPF'. Print Edition | Subscribe