Help low-wage workers to have retirement savings

Not all Singaporeans are as fortunate as senior correspondent Goh Eng Yeow to be able to join the Enhanced Retirement Sum scheme ("Turning 55 - the best is yet to be"; Aug 28).

The Central Provident Fund's CPF Life scheme is a sound annuity plan, provided account holders are able to meet the Minimum Sum.

According to this year's Budget, however, about 460,000 low-wage workers earning below $2,000 a month would qualify for the Workfare Income Supplement scheme.

This represents approximately 30 per cent of Singapore's total labour force.

Given their financial position, it is unlikely that these workers will be able to meet the CPF Minimum Sum upon turning 55, jeopardising their chances of a decent annuity in retirement.

Their predicament will likely be exacerbated in the near future, as more low-wage positions are threatened or eliminated entirely with the advent of automation, other industry-disrupting technologies, as well as general global economic headwinds.

At the same time, healthcare and living costs are likely to continue rising in the coming years, putting further strain on these individuals' already limited savings.

There is, therefore, a real risk that the CPF Life scheme ends up benefiting only high-earning individuals who were already well-placed to enter retirement, while failing to offer substantial assistance to those who require financial aid the most.

Readjusting the computation of CPF contributions, topping up the pension fund and tinkering with the Minimum Sum is only part of the solution.

In addition to addressing the symptoms, we must also tackle the root of the problem, that is, income inequality.

In the short term, the Government should explore more progressive policies on taxation and community welfare, as well as appropriate wage controls, thereby ensuring that retirement savings are not out of the common man's reach.

In the long term, the next technological revolution promises to create not only massive productivity gains, but also severe structural unemployment.

At that stage, more ambitious adjustments, such as a universal basic income, might be necessary.

Paul Chan Poh Hoi