SINGAPORE - Residents in Singapore can look forward to a more flexible national retirement scheme that allows them to customise different levels of savings and payouts.
A lump sum withdrawal at age 65, of up to 20 per cent of their Central Provident Fund (CPF) savings, is also on the cards.
It marks a departure from monthly payouts, as a government-appointed panel offered proposals on Wednesday to improve the CPF system.
If accepted by the authorities, the changes will shift the fund from a largely fixed retirement formula for all to one that gives members more control over their retirement savings.
"The CPF system is fundamentally sound," explained the panel in its report.
Now, all CPF members must meet a standard Minimum Sum at age 55. The amount, which is $155,000 and increases to $161,000 in July, is locked away until age 65 when CPF members start receiving a monthly payout.
The biggest change is splitting the Minimum Sum into three levels. CPF members can choose to lock away a basic sum of $80,500, a higher sum of $161,000 or an enhanced sum of $241,500 at age 55. The monthly payouts at age 65 range from $650 to $1,900.
They can also withdraw any amount above the basic sum, provided they own properties.
Those who do not start withdrawing at age 65 should be rewarded with larger permanent monthly payouts, the panel said.
Using those who turn 55 in 2016 as example:
|Sum required at 55||Monthly payouts at 65|
|Own property||Basic Retirement Sum: $80,500||$650-$700|
|Own property but choose not to pledge||Full Retirement Sum: $161,000||$1,200-$1,300|
|No property||Full Retirement Sum: $161,000||$1,200-$1,300|
|Want higher monthly payouts||Enhanced Retirement Sum: $241,500||$1,750-$1,900|
Source: CPF Advisory Panel
But the basic retirement savings will have to be increased each year for every new batch of CPF members who turn 55 after 2016, to adjust for inflation and higher standards of living.
The panel also proposed allowing withdrawal of up to 20 per cent of retirement savings at age 65, giving members more flexibility with their savings. Prime Minister Lee Hsien Loong first suggested the 20 per cent withdrawal cap at last year's National Day Rally.
The panel also wants incentives to encourage members to top up the accounts of their spouses and family members with little CPF savings, so that they too have a stream of retirement income.
The 13-member panel chaired by Professor Tan Chorh Chuan, which was appointed last September (2014), drew up its recommendations after it met more than 400 Singaporeans in focus group discussions and reviewed more than 150 suggestions in writing.
The panel hopes its recommendations "will provide useful insights in helping the Government to improve the CPF system", said Prof Tan in a letter to Manpower Minister Tan Chuan-Jin accompanying the report.
Responding in a letter, Mr Tan said that the Government has accepted the recommendations and it "will provide details on the CPF changes" at the Budget Debate next month.
The panel is working on a second set of proposals on CPF payouts and returns which will be submitted to the Government in the middle of the year.