The Online Citizen A Community of Singaporeans By Leong Sze Hian –
I refer to the article “Many low-wage workers prefer cash plus CPF mix” (Straits Times, Aug 11).
Only 14% prefer cash?
It states that “Of the respondents, 47.8 per cent always picked the CPF combination package, regardless of the total sum. Only 14 per cent always preferred cash payments, found the study, which polled 1,000 low-wage households in the last quarter of 2011”.
What about the other 38.2%?
I am somewhat puzzled because with 47.8 per cent always choosing the CPF combination package, and only 14 per cent always preferred cash payments, what happened to the other 38.2 per cent (100 – 47.8 – 14)?
Presumably, there were only two choices – CPF combination or cash.
How many chose CPF when the payout was the same?
I think perhaps the most significant statistic may be the response to the question whereby the total payout remained unchanged at $1,200.
For example, if you ask respondents to choose by offering more than $1,200, then some may choose the CPF combination because of the perception that they get more than a cash only payout.
Cash is king?
I think it may defy common sense as to why anyone would not prefer cash, because cash can be used for housing (like the CPF Ordinary Account (OA)), medical (like the MediSave Account (MA) abeit with restrictions of use), and the Special Account (SA) can only be utilised from age 65 as monthly payouts under the CPF Life annuity scheme?
Even for those who may want the higher interest rate in CPF, they can always use cash to top-up their CPF under the CPF Topping-up scheme.
Workfare helps retirement?
As to “WIS was introduced to help low-wage workers build a retirement nest egg, said Mr Zanal, who heads a NTUC division that looks after contract, casual and low-wage workers, “But the reality is that their net incomes are actually insufficient to help them cope with rising costs”, he said”, I thought the original main purpose of introducing Workfare was to help older low-wage workers increase their wages to help them with their living expenses.
Self-employed: 100% to MediSave
Notwithstanding the above, if the purpose is to help low-wage workers build a retirement nest egg, why is it that 100 per cent of the Workfare payout for the self-employed is to their MediSave?
MediSave helps retirement?
The MediSave of low-wage households may be depleted by rising medical costs.
After all, in theory, isn’t MediFund supposed to help those low-wage families who are unable to pay for their medical expenses, under Singapore’s “affordable” healthcare system?
Workfare ratio – 1 : 2.5 (Cash/CPF)
Clearly, the current Workfare cash to CPF ratio of 1 : 2.5 for workers, is overskewed towards CPF.
For example, for a Workfare monthly payout of $100, only about $29 is cash, with the balance $71 evenly split between the OA, SA and MA accounts. This cash payment of just $29 may not be of much help to low-wage workers, particularly in the light that inflation is now running at 5.3 per cent.
Let the people choose
Actually, there may be a simple solution – have a default option of a combination of CPF and cash, and allow people to opt for cash only.