SINGAPORE - Proposed basic retirement savings - while much lower than the current minimum sum - will need to be increased, to keep pace with inflation and higher standards of living, said a government-appointed panel reviewing the Central Provident Fund (CPF) system on Wednesday.
The most basic tier will require members to have at least $80,500 at age 55, provided they own a property. Such a sum will give them a monthly payout of $650 to $700 from age 65 for as long as they live.
This amount should be increased by 3 per cent each year from 2017 to 2020, the panel recommended. After that, the rate of increases should be reviewed periodically and CPF members should be given early notice should the sum be raised, it said.
The basic sum was one of three savings tiers that the review panel suggested, to replace the current CPF Minimum Sum, which is $161,000 from July. It would give people a monthly payout of $650 to $700 from age 65, for as long as they live.
Besides the basic tier, CPF members can voluntarily keep double or three times the basic amount in CPF - in what the panel calls Full and Enhanced Retirement Sums - to receive higher monthly payouts of as much as $1,750 to $1,900.
Those who do not want to start receiving monthly payouts at age 65 should be allowed to do so, added the panel, and these people should be rewarded with higher permanent payouts for delaying their withdrawals.
The panel also singled out an area of concern: only 55 per cent of those who turned 55 in 2013 have enough CPF savings to meet the basic retirement sum of $80,500.
While the proportion is expected to increase to seven in 10 by 2020, those who did not meet the basic retirement sum should continue to get help from the Government through schemes outside the CPF, it noted.
This includes the Silver Support Scheme, which supplements payouts from needy old folks' CPF accounts.
More details of the scheme are expected at the Budget Debate next month.