CPF: What happened since GE2006?

On 18 September 2007, Parliament debated on CPF Reform, whereby CPF annuity schemes were first proposed. The Secretary-General of Worker’s Party Low Thia Khiang made an impassioned plea for the Government to delink retirement age and CPF withdrawal age, and to establish a “longevity fund”, in place of annuity schemes, to enable Singaporeans aged above 85 years old to enjoy a secure retirement.

English Translation of Low Thia Khiang’s Speech

Mr Speaker Sir,

The Workers’ Party opposes the Government’s proposal to defer the CPF Minimum Sum draw-down age from 62 years old to 65 years old, and eventually to 67 years old. Originally, Singaporeans could withdraw all the savings in their CPF accounts at the age of 55. Subsequently, the Retirement Account was created to cater for the needs of the post-retirement lives and the Minimum Sum was retained at the age of 55.

The ever rising Minimum Sum has resulted in some Singaporeans having just $5,000 to be withdrawn from the CPF at the age of 55. Not only that, now the Government wants to further stretch the Minimum Sum withdrawal period from our Retirement Accounts to 67 years. This is too much! Although we support the gradual increase in retirement age, we are of the view that the retirement age and the CPF withdrawal age should be delinked.

We encourage people to have lifelong learning. If they are healthy, they can live and work till an old age, there is nothing wrong with that. But having worked so hard for the betterment of their lives, should not our workers be entitled, at the age of 62, to have a choice as to whether they want to slow down and take up a less stressful job or a part-time job? Although the income may be less, with the release of the savings that they have accumulated over the years in the CPF account they ought to be able to provide for their living expenses. In such circumstances, the older workers can then afford to choose the type of life they want for their old age.

Although it is predicted that our people will be living longer, longer life does not necessarily mean that they will stay healthy and be able to carry on working. It also does not mean that they will continue to have the energy and drive at work. Not allowing Singaporeans to start drawing down on their Retirement Accounts at the age of 62 would result in some Singaporeans having to work till they are old or even until they are dead.

If we want all Singaporeans to work until a ripe old age, even in their sunset years, and continue to worry about being retrenched and not being able to make ends meet, this is certainly not a correct phenomenon in Singapore as we aspire to progress into a world-class country. This also cannot be the kind of “positive retribution” in life for the people in a world-class country.

The Government is making it compulsory for the people to purchase annuities. Although the details are still being worked out by a committee, it is a foregone conclusion. I think this compulsory annuity scheme will not solve the problem that the Government is worried about. This is because not every CPF member has adequate funds in his CPF account for the premium to be deducted by the Government.

What about those who do not have CPF to enable the Government to deduct directly and who happen to live beyond 85 years of age? What are they going to do? Furthermore, with this reduction made to pay for the premium, the remaining sum would be less, resulting in not having enough CPF money to sustain a longer payout for retirement years.

Based on similar insurance schemes in the United States, such insurance scheme may not be fair to the insured because these people paid one lump sum upfront and can only start to enjoy the annuity payout after 20 years. If they do not live that long, they will not be able to enjoy anything from it and all their money will go down the drain.

The world today is becoming more strange. Generally, people buy life insurance because they are afraid that they may die young and their family may run into financial difficulties. But in this world today, longevity itself has become like a sin and the people are now being forced by the Government to buy an annuity lest they cannot fend for themselves in their old age.

Singaporeans have worked so hard all their lives. They have contributed much to our nation-making process to make Singapore what it is today. Our people have worked hard and they have contributed much. Credit must be given to them. But now, if one lives a long life and his CPF savings are exhausted, they may have no money for their old age and suffer in life. Now, the Government is forcing them to buy an annuity so that they can have money for their old age. I think this is an irresponsible act on the part of the Government.

Therefore, I urge the Government to set up a “Longevity Fund” and make monthly payouts to Singaporeans who have lived beyond the age of 85 and who are in financial difficulties, so that those who live longer can enjoy a secure retirement, and not wishing to see those people who are unable to contribute to the country vanish into thin air so that they will not add to the economic burden of the country.

I feel that the call for the establishment of the Longevity Fund is not unwarranted. I am sure the Government can well afford it. From what I know, in Vietnam and Nepal, they have such a social security scheme so that the people can enjoy their old age, yet their countries’ economies have not gone bankrupt because of it. I feel that the people in Singapore, particularly Singaporeans of my generation, will have savings in their CPF, moreover, this money is still in the hand of the Government subjecting to manipulation.

From my meet-the-people sessions, I have come to the conclusion that most Singaporeans are responsible and they have moral integrity. Not everyone will queue up for the Government’s handouts, neither will everyone able to live such a long life to enjoy from the fund.

Mr Speaker, Sir, during the recent Asian financial crisis, the older Singaporeans were the first to bear the brunt as they were retrenched and deserted by the employers. They faced unemployment, no income and much hardship in life. Many still feeling the fear recalling the past. Delaying the draw-down age for the CPF Retirement Account will cause the people to have more worries and anxieties. I hope the Government will carefully review the policy.

To enable Singaporeans to forge an identity with the nation, policies should not be formulated based purely on digits and economic considerations, neither should the Government approach the issue of retirement from an economic benefit perspective. If the Government’s policy causes a change in the people’s values, thinking that old people cannot contribute economically and hence they are a burden; then the Chinese saying “To have an old person at home is like having a treasure” will become “To have an old person at home is of no value.” This, in the long run, will affect the cohesiveness of our family unit and our society.

Source: Hansard