More interest in CPF? Use it well

The evolution of the Central Provident Fund over almost 60 years has led to organisational excellence characterised by sound and prudent policies, as well as innovative practices that have led to awards and much international interest in the Singapore system. As the protection of funds is underwritten by the state, "one of the few remaining triple-A credit-rated governments in the world, this is a solid guarantee", as the Finance Ministry emphasised.

Against this, it might strike external observers as odd to note the intensity of online comments on the "shifting goalposts" of the Minimum Sum and the "short-changing" of CPF members as a result of so-called lacklustre returns.

Such disquiet has led Deputy Prime Minister Tharman Shanmugaratnam to rise to CPF's defence on a number of occasions, the latest being a recent forum at which he acknowledged the system could evolve further. "We are in a very rare situation of starting from a very strong foundation and being able to improve our system, and improve we will," he said.

A good position to contemplate changes but a bad climate to make them, given runaway misperceptions? It need not be so. One should make the most out of online discomfit over CPF by riding on the burst of interest to promote greater public awareness of old-age financial security and ways to achieve this.

The reality is that refining the CPF and CPF Life annuity scheme alone, important as these are, is not a panacea for looming social security challenges. As a compulsory retirement savings scheme, the CPF can offer only what its members put in, any top-ups by the state, and the returns on investments - subject to a fickle marketplace and the state's generosity when it undertakes to eliminate risk.

CPF is geared mostly to those in lower middle income bands. It is less relevant to the better-off, it offers little comfort to the self-employed and occasional workers who might make minimal contributions, and gives no relief to housewives and the disabled who have never been employed. Hence, it would be unwise to put all one's nest eggs into one basket.

As CPF alone might not be enough, individuals need to take on the responsibility of strengthening old-age support via private savings, supplementary pension plans, and monetisation of assets like homes. There is much to think through and discuss publicly, including the feasibility of a national pension scheme for those at the bottom, any indexing of basic payouts to inflation, the financial basis of a proposed scheme, and burdens placed upon taxpayers. Critical to any such discussion will be the need to stay focused on keeping the system sustainable and sound.