SINGAPORE — Calling a review of the Central Provident Fund (CPF) system now “timely”, MP (Chua Chu Kang GRC) Zaqy Mohamad started the debate on the President’s address in Parliament yesterday and asked that the Government find new ways to improve the returns on CPF savings.
This would help reduce what he called “unhappiness with the changing ‘goal-posts’” of the Minimum Sum.
“Only half of Singaporeans today are able to meet their Minimum Sum. Thus, I can certainly understand the anxiety and fear, given the barriers,” said Mr Zaqy. A comprehensive review of the CPF would be able to provide better retirement adequacy, he said, adding that many residents he had met have asked the Government to provide an alternative to CPF-approved investment funds.
One such possibility is a Government-backed investment plan that tracks inflation, above the existing Ordinary Account and Special Account interest rates, suggested Mr Zaqy.
Existing CPF-approved investment funds often carry certain financial risks beyond the understanding of the ordinary CPF contributor, he said, while a Government-led plan is a trusted plan, with standard terms and the objective of tracking inflation to protect one’s savings for the long term.
Joining the debate was MP (Holland-Bukit Timah GRC) Liang Eng Hwa, who praised the CPF system and said that, without it, some Singaporeans might not have saved enough for retirement. If not for the system, he said, home ownership rate here would be lower and hospitalisation expenses would come with greater cash outlays.
“But because we have the CPF system in place and Singaporeans have seen that it has worked, we have the flexibility today of reforming the system one way or another, to better meet the needs of the generation as well as that of (the) ageing population,” said Mr Liang.
The CPF was in the spotlight recently after the Government raised the Minimum Sum to S$155,000 from July this year, or S$120,000 in 2003 dollars.
On Sunday, Manpower Minister Tan Chuan-Jin wrote a blog post explaining at length how the CPF system works and maintained that the Minimum Sum is raised to give Singaporeans peace of mind during their retirement years.