In the ongoing debate on the Central Provident Fund (CPF) issue, which has raised blood pressure all round a few notches, there doesn’t seem to be a meeting of minds. Not yet anyway.
On the one side is the Government which insists that the CPF scheme – and its payouts – is reasonable, safe and a responsible way to ensure Singaporeans have enough to spend on basic needs when they retire.
On the other side, however, are Singaporeans who feel cheated or betrayed that what they were promised – that they will be able to withdraw their CPF savings in full upon age 55 – has not been and is not being honoured.
One can see both sides of the arguments and there is merit on each side’s case.
The Government’s fear that many will end up squandering their life savings if they were to withdraw them in a lump sum is not without merits. It is easy to take the purist point of view and say that the member should be allowed to withdraw the sum in full since it is his money.
Given that there will be close to a million people aged 55- and 65-and above by 2030, the potential of a large segment of this being left with little to no money for their later years is there.
If this were to come to fruition, the solution must then be higher taxes on the younger working population to help fund the daily living of those who are unable to fend for themselves.
At the same time, however, one can understand the desire to have a lump sum to do as one pleases when one is older. After all, why do we work so hard for? Is it not so that we can afford some pleasures in our later years? And really, there is nothing wrong in using our own CPF money for travel when we retire, if that is what we want to do.
So, is there no room to come to a compromise then?
I believe there is but so far, the Government does not seem to want to budge, so firm is its belief that it is doing the right thing. Nonetheless, the Government is undertaking a review of the scheme altogether. So, all is not lost.
And in this, it should be open to ideas and suggestions to improve the scheme and not dismiss out-of-hand alternative points of views which are put up for consideration.
In Parliament on Tuesday, for example, the Member of Parliament (MP) for Nee Soon Group Representation Constituency (GRC), Lee Bee Wah, made a sensible suggestion which could have been explored further, rather than be given an outright dismissal by the Manpower Minister, Tan Chuan Jin.
But to be sure, the exchange between the two is briefly reported by the media, and we will only know the full debate between them when the parliamentary records are made available to the public.
In the meantime, this was what Channel NewsAsia reported:
Ms Lee Bee Wah, the MP for Nee Soon GRC, asked if the withdrawal age could be tweaked. If the life expectancy is 82 years now, for example, can Singaporeans be given the option of withdrawing their lump sums five to seven years before they turn 82, she suggested, so they can manage their money?
Mr Tan replied that “we don’t know how long each individual will live, but as a whole, individuals will live longer. The more you take out, the more you reduce that monthly payout you have available. Are you able to stretch that for a long period?”
The Straits Times reported it more or less the same way – that is, briefly.
It is a pity because Ms Lee’s suggestion could have been explored further, and Mr Tan’s response could have been reported in more details.
Nonetheless, be that as it may, Ms Lee’s suggestion is worth considering – given that it is a compromise which might not go against the rationale of the CPF scheme, which is self-sufficiency or self-reliance.
Mr Tan’s argument against full withdrawal has always been that life spans have increased and thus the savings would have to be spread out accordingly, after retirement.
That makes sense, of course, even as some rail against it.
But Ms Lim’s suggestion is also based on the original life expectancy back in 1955 when the scheme was first introduced – to afford the member’s savings to last 5 to 7 years after retirement.
In the same way, she argues, why could a member not be allowed to withdraw the rest of her CPF savings in full 5 to 7 years before the expected end of her life?
If, however, the Government has good reasons against this, perhaps it could consider a condition to this – only those who have fully paid up their homes will be allowed to fully withdraw the rest of their CPF savings 5 to 7 years before the expected end of life.
This is for the contingency that if they withdraw their CPF savings in full and then squander them, they could still fall back on their homes which, incidentally, the Government has advocated as another means to self-sufficiency in old age.
Mr Tan’s rejection of Ms Lee’s idea – that “the more you take out, the more you reduce the monthly payout” – is irrelevant. Once a member withdraws all his savings, he no longer receives monthly payouts.
Certainly there would be questions and problems with such a suggestion but the point is that the Government should consider these alternatives, and not dismiss them without any substantive reasons.
Mr Tan’s remarks, made separately earlier, that allowing members to withdraw their CPF monies in full upon reaching age 55 would be “wrong and irresponsible” are not helpful, especially when underlying the unhappiness over the scheme is the sentiment that the Government has constantly moved the goal post and that members can no longer trust it.
And when alternative proposals are shot down seemingly without consideration, it makes it even harder for the Government to regain the trust.
But, as said above, all is not lost. The review of the CPF scheme is an opportunity for all concerned to voice their views honestly and openly.
The bottomline is this: the Government must come up with a compromise to regain the trust of its people over the matter.
Ms Lim has suggested one such possibility.
The Government – and Mr Tan in particular – needs to take these seriously.
Vote here on the topic: “Return CPF to members 5 to 7 years before end of life expectancy“.