SINGAPORE - The Workers' Party (WP) wants the Central Provident Fund (CPF) system to be more flexible by allowing people to receive monthly payouts earlier.
But the opposition party does not back the withdrawal of all CPF funds in a lump sum, said Non-Constituency MP Gerald Giam in the Budget debate on Tuesday.
Mr Giam noted that the payout eligibility age - the age at which CPF members can start receiving monthly annuity payouts - is 64 this year and will be raised to 65 from 2018 onwards.
He suggested lowering this age to 60, since some CPF members may have a genuine need to start receiving payouts from an earlier age.
"For example, they may have been retrenched and, because of a skills mismatch or age discrimination, may not be able to secure another job," Mr Giam said. "Or they may be labourers who are simply be too old to do manual work."
Changing the payout eligbility age "will give CPF members the flexibility to start receiving CPF monthly payouts earlier, if they need to, instead of having to wait until age 65".
He added that since the official retirement age is now only 62, "this leaves a gap of three years that a retiree will have to tide over, should his company not offer him re-employment until 65".
But Mr Giam also recognised that starting payouts at an earlier age would mean lower payouts each month.
The CPF Advisory Panel recently recommended a permanent 6 per cent to 7 per cent increase in monthly payouts for each year that members defer these payments until they are 70. In line with this, the WP is proposing a permanent 6 per cent to 7 per cent decrease in payouts for every year that the payouts are brought forward.
Mr Giam also suggested that every CPF member be invited to meet one-on-one with a CPF Board officer a few months before turning 55, so as to get a personalised explanation of the funds in his or her account, and the choices available in handling the money.
He noted that many Singaporeans would like to withdraw all of their CPF money at 55, and added that he too would like to do so if given a choice.
"However, the reality for me, and I think many other working Singaporeans, is that if not for the forced savings that CPF has imposed, we would probably have saved much less for retirement," Mr Giam added.
"Even if CPF members make an effort to invest their retirement savings after they are withdrawn, not many have investment skills that are good enough to consistently beat the current 4 per cent CPF retirement account interest rate in the long term."
In his speech, Mr Giam also called for the cash payouts under the new Silver Support Scheme, which provides support to the poorest elderly Singaporeans, to be paid out on a monthly basis instead of quarterly.
"Silver Support recipients are not working and receiving a salary, unlike Workfare recipients, yet they still have monthly household expenses like bills, food, transport and rental," he said.