NTUC proposes major tweaks to CPF, aimed at helping workers save more for retirement

People walking past the CPF Building logo at the foot of the building along Robinson Road. The National Trades Union Congress (NTUC) has called for an improvement to the Central Provident Fund (CPF) system to better meet the retirement needs of worke
People walking past the CPF Building logo at the foot of the building along Robinson Road. The National Trades Union Congress (NTUC) has called for an improvement to the Central Provident Fund (CPF) system to better meet the retirement needs of workers. -- ST PHOTO: KUA CHEE SIONG

SINGAPORE - The labour movement is proposing major tweaks to the national retirement savings scheme, with 15 recommendations aimed at helping workers save enough for their golden years.

It is calling for flexibility on lump sum withdrawals at retirement, and to raise total contribution rates for workers over age 55, said National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong.

The labour movement wants workers to be allowed to withdraw a certain percentage of their Retirement Account savings, even for those who do not meet Minimum Sum.

But to make sure people understand what they are getting into when they withdraw a chunk of their retirement savings, the NTUC wants more financial counselling as well as a financial incentive to get people to leave their savings intact.

The labour movement also wants the limit of combined CPF savings that attract an additional 1 per cent interest be raised from $60,000, and that a 10-year schedule of the Minimum Sum be provided for greater certainty for workers.


The recommendations come after focus group discussions last November and December with more than 250 union leaders, workers, self-employed people of different age groups, and internal discussions within the NTUC Central Committee. They were sent to the CPF Advisory Panel on Tuesday.

Ms Cham said at a media briefing at the NTUC Centre on Wednesday that the fundamentals of the scheme should remain.

"Essentially we want to find ways and means to see how we can help CPF members increase their CPF savings by looking at contribution rates...how do we also encourage them to continue to work longer," she said.

One recommendation proposed by the NTUC is to close the gap of 2 percentage points between the CPF contribution rates for workers aged over 50 to 55 with workers aged up to 50, and raise the contribution rates for age bands above 55. The Government should also revise long term contribution target rates, it said.

The ordinary wage ceiling for CPF contributions should be raised from $5,000, NTUC suggested. The new amount could be between $500 and $1,000 higher and rise progressively to correspond with the 80th income percentile, which was $6,000 in 2012.

The unions also want the Government to support freelance and self-employed people with Workfare Income Supplement top-ups if they make contributions to their Special Accounts, as well as provide incentives for service buyers to contribute to these people's CPF accounts.

Housewives and aged parents could benefit from better tax relief proposed for people who top up their family members' CPF accounts. They currently receive a maximum of $7,000 per year in tax relief, but NTUC recommends this be changed to $7,000 per family member receiving top-ups. The annual income cap for family members receiving top-ups that attract tax relief should be raised from $4,000 to $12,000, it said.

NTUC also supported allowing a lump sum withdrawal at retirement, regardless of whether the CPF member meets the Minimum Sum. Financial counselling should be provided to all members to help them understand the impact of a withdrawal on monthly payouts.

Ms Cham acknowledged that those who looked forward to this would likely be people who cannot meet the Minimum Sum, but added: "We had very responsible members who said it may not be advisable for (people) to draw down the lump sum if they already do not meet the Minimum Sum," which led to the proposal of a non-withdrawal incentive. NTUC did not specify an amount for the incentive.

Other changes that the NTUC also proposed:

1. Giving members the option of receiving an escalating payout stream under CPF Life. The Government could provide incentives to those who opt for lower initial monthly payouts or defer their drawdown age.

2. Allowing CPF members the option to voluntarily top up their MS beyond the national stipulated amount, set at $161,000 for those who turn 55 this year, subject to a cap.

3. Raising the average gross monthly wage for workers to receive the maximum Workfare Income Supplement (WIS) payouts from the current $1,000 to $1,200.

4. Setting out a clear 10-year timeline of the Minimum Sum together with a clear schedule of CPF Life Payouts so that workers get more certainty and clarity about their payouts and obligations.

5. Continue strengthening CPF Life as the basic national annuity plan so that the interests' of majority workers are taken care of. NTUC also wants to ensure that other alternative investment or annuity plans, that are high risk-high return, be made strictly optional and supplement CPF Life.


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