Our CPF system has a big problem: Lim Swee Say, 2007

In 2007, Parliament debated the issue of “CPF reforms and other measures for a secure retirement.”

The secretary general of the NTUC, Lim Swee Say, spoke of what the union faced, and its worries in helping workers be able to afford retirement.

Below is an extract of his speech, which you can read in full here.



Lim Swee Say
Minister in the Prime Minister’s Office
Secretary General, NTUC
18 September 2007

Today, our CPF system has a big problem. This is the viewpoint of the labour movement. Workers, upon reaching the retirement age at 62, will be withdrawing their Minimum Sum for 20 years until the age of 82. With longer life expectancy, many of them will outlive these 20 years. By the time they reach 82, they will run out of the CPF draw-down period. By then, what do they do? So I told my union leaders that we must find ways to help our workers to work for at least three more years, if not longer. The question is: when and how? We have two options.

One option is to help the workers to work from the age of 62 to 65, defer their retirement. Another option is for them to retire at 62, draw down their Minimum Sum over 20 years. At the age of 82, when they outlive their CPF Minimum Sum, they come back to the NTUC or the labour movement and we will help them to look for jobs for three more years during the age of 82 to 85.

I asked my union leaders, “Between the two options, which one do you prefer?” My union leaders need not even think for a second. They said, “Secretary General, let’s go for the option whereby we help them to keep working from 62 to 65.” Because to help workers to gain re-employment from 62 to 65 is already not an easy task. To hope that we can help them gain re-employment at the age of 82 to 85 is an impossible task. Therefore, we decided that we must go all out to explain to the workers why it is to their own benefit to work from 62 to 65, as a first step.

One union leader told me, “Mr Lim, I don’t believe I will face this problem because I am not going to live that old.” I said, “How do you know?” He said, “My fortune teller told me.” I said, “Your fortune teller told you?” He said, “Yes. My fortune teller told me that I wouldn’t live beyond 72.” I said, “Your fortune teller aik leng boh?”, which means accurate or not. He said, “Not bad. According to his market reputation, out of every three predictions, one would come true. So, by market standard, this is actually quite good.” I said, “Let me take a look at you.” I pretended to look at his face and his palm. I said, “Look, I am also a good fortune teller. Let me tell you. You have a very good chance of living beyond 84.” He looked at me and said, “84?” I said, “Yes, 84.” Then he asked me, “Aik leng boh?” He asked me whether my prediction is accurate or not.

I said, “My prediction is more accurate than your fortune teller. His success rate is one out of three. My success rate is one out of two.” Why did I say one out of two? Because the median age is 84. In other words, of all workers reaching the retirement age of 62 today, half of them, by statistics, will live beyond 84. So, one out of two persons, randomly picked, will live beyond 84. My point to him was that we should not take this lightly, because one out of every two workers will indeed live beyond 84 and, therefore, as union leaders, we must do our best to explain to them the difference between average age and the median age.

Mdm Deputy Speaker, indeed, this is the biggest concern of the labour movement. With one out of every two mature workers living beyond 84, our concern is that this CPF safety net, in terms of meeting our retirement needs, is not going to be able to perform the task. One out of every two workers will live beyond the retirement safety net provided by the CPF. Therefore, there is no doubt in our minds that changes are definitely necessary.