Not many would think of their retirement savings as a football game. Yet this was the analogy used by some tasked with recommending changes to the entrenched Central Provident Fund (CPF) scheme.

"Think of the investment tools that generate high returns as strikers. You can't have 11 strikers in a team, right? That would be ridiculous," CPF panel adviser Christopher Tan tells The Sunday Times at a recent roundtable, in response to those who clamour to take out their savings and put them in riskier options.

Instead, CPF savings in the Retirement and Special Account, which currently earn guaranteed interest rates of 4 per cent per year, should be regarded as "defenders".

"These are your safe assets, your goalkeepers. That way, even if the market's volatile, it's fine. You can let the strikers go out there and focus on scoring goals," says the chief executive of financial advisory firm Providend.

Mr Tan was one of 13 persons appointed by the Government two years ago to sit on a committee to recommend improvements to the 61-year-old system.

Over the last two years, the panel - chaired by National University of Singapore president Tan Chorh Chuan - has thought hard, with care, about how to make the CPF, a key player in every Singaporean's retirement security, a stronger one.

Six of them met The Sunday Times to talk about the process.

The other is a new CPF Life option which sees monthly payouts increase by 2 per cent every year to keep pace with inflation.

But how did the panel arrive at these suggestions? Were there any moments that drove them up the wall?

By its own account, the panel was a "consensus-seeking one". The team gives credit to Prof Tan, who sought to lay out the pros and cons of each suggestion on the table.

"It was a good process," he says. "It allows everyone to sharpen their thinking. When one person thought something should go this way, we asked, why? What is the evidence? What are the consequences?

"Over time, we came to a consensus and a broader perspective on how the CPF system can benefit everyone."

The flipside of such a process was that it took up time. Lots of it. There were more than 20 meetings, with some going past five hours.

"We always overran, basically," says Mr Tan, as someone interjects: "We learnt to cater food after a while."

There were also numerous "side meetings", as one panellist called it, and "countless e-mail exchanges".

To give the discussions some meat, the panel relied on statistics - such as the expected life expectancy for future generations - which the Manpower Ministry helped to provide.

Each member also attended some 12 to 15 focus-group discussions to get a sense of the ground.

It was at these discussions that they got in touch with the man on the ground, and were confronted with his concerns.

WITHDRAWAL

Perhaps the greatest "conflict" was over whether to allow a lump-sum withdrawal and, if so, how much.

There had been strong calls for greater flexibility in the use of CPF funds, and many lamented that they could not use their money the way they wished in their golden years.

Mr Tan was among those who did not approve of withdrawals of any amount, at first.

He explains: "I felt that if you allowed people to withdraw, then what was the point of the system? If I give you a bank card, there's the tendency to withdraw whenever you have the chance."

Mrs Hauw Soo Hoon, operating partner of venture capital firm iGlobe Partners, was also not in favour. After looking through the numbers, she was convinced that allowing withdrawals would result in inadequate retirement balances for several members.

But she notes: "It's very difficult to explain to the people. You can explain the statistics all you like but, emotionally, they want to see their money back."

On top of this, the panel had heard legitimate reasons for withdrawals: some CPF members were ill and wanted the money to ease the caregiving burden, others were unemployed and needed the cash, while others had religious reasons, like going on the haj.

Various combinations were considered. The panel even weighed some focus-group participants' suggestion of allowing full withdrawals on a case-by-case basis.

"It would greatly increase the complexity of the CPF system," says Prof Tan. "In the end, I feel we struck a good balance between flexibility, adequacy and simplicity, supplemented by giving people timely information, so that they can make well-informed choices for themselves."

It was after several impassioned meetings that the panel members agreed on allowing a one-time withdrawal of up to 20 per cent at age 65. Prof Tan is proud of the fact that his panel has given CPF members one option they did not have before. He says: "Yes, there are risks... But we should provide an option for individuals to judge these risks themselves, and then make a decision based on their specific requirements."

That the withdrawals can take place only at age 65 - when a person is eligible to start payouts - and not earlier, acts as a safeguard.

He adds: "If you are asked to exercise this option when you know better what your finances look like at retirement and how a withdrawal will affect your payouts, you will be able to make a better judgment. If you could take out 20 per cent at 55, you'd think, 'Oh, my retirement is some time in the future'."

LACK OF FINANCIAL LITERACY

But a much bigger problem the panel had to grapple with, beyond satiating people's desire for greater flexibility, was widespread financial illiteracy.

Members were surprised to find out that many Singaporeans had no idea how much retirement would cost. This, in spite of the fact that Singaporeans regularly top the world's charts in mathematics.

As Professor Benedict Koh, associate dean at the Singapore Management University Lee Kong Chian School of Business, puts it: "There's a difference between being educated and being financially literate."

Mrs Hauw recounted one focus-group discussion where participants were asked what they would do with a basic CPF Life payout of about $600 monthly. One woman, she says, allocated $200 for food.

"I asked her, 'That works out to $6 for a whole day's worth of food - is that enough for you?' So setting a reasonable and realistic budget, even for what seems basic, is still something we have to teach," she says.

It's a sentiment shared by many of her fellow panel advisers.

Prof Tan encountered a "knowledge gap": many he spoke with at the panel's focus-group discussions could not connect the dots that the Minimum Sum was meant for CPF Life annuity payouts.

"People were discussing something without understanding why it was necessary to set aside a sum. Once people realised it was for lifelong payouts for themselves, the whole discussion changed," he says.

Such a rudimentary understanding was also cause for worry for Mr Tan, who wavered over the CPF Lifetime Retirement Investment Scheme (LRIS).

"My fear was that some would think this is a government-managed scheme. If you don't understand investments, when the markets go down, you blame the Government," he says.

This lack of basic understanding was what led the panel to advocate more financial education in both sets of recommendations.

NTUC's International Affairs special duties director Sylvia Choo thinks that training in financial literacy should start as soon as a CPF member starts work.

"Right now most of our financial literacy programmes are for people aged around 50. But at that stage, it may be a bit too late," she says.

MP Saktiandi Supaat, who is also head of the forex research team at Global Markets at Maybank Singapore, thinks that such programmes should take care to give the Singaporean context, like how home ownership and MediShield Life are important for one's retirement security.

WHAT'S NEXT FOR SINGAPORE

One of the guiding principles the panel set out for itself over the last two years was simplicity.

Prof Tan is aware of how complex the CPF system can get, even for himself as the panel chairman.

But Singaporeans need to understand not just the CPF, but several other policies as well, such as MediShield, and this can be overwhelming.

He says: "There is a whole range of policies and a person who's working or doesn't have time to read up on them, may have difficulty figuring all of them out."

He hopes they have succeeded. That the CPF Board now gives a more colourful, graphical yearly statement to its 3.7 million members is something he considers a win for Singaporeans, even though it was not one of his panel's specific recommendations.

The panel had, in the first part of its report, recommended more public education to improve members' understanding of the CPF system and enable them to make informed decisions best suited to them.

As for Mrs Hauw, it was sitting on the panel long enough to see some changes become law that was rewarding.

"We can see the effect of the changes, see everyone's reactions to them - it's very satisfying," she says.

But it'll be a while before the second set of recommendations is set in stone. The LRIS, for one thing, will need an expert panel to determine the sort of indices and counters that would go into the scheme. It would take a "few years" before the CPF Board finally offers it.

So would any of them be on the LRIS panel? Prof Tan's answer is almost immediate: "As far as we know, our work is finished."