A survey by Manulife, released on Wednesday, has found that 4 in 5 Singaporeans are not confident their Central Provident Fund (CPF) savings will meet their retirement needs.
According to the survey conducted with 500 respondents, 47 per cent thought their CPF savings would not be adequate to cover their retirement needs, and 44 per cent felt the returns were too low.
“The survey revealed that 75 per cent of Singapore investors do not make additional voluntary contributions to their CPF accounts, with most saying that they do not have enough money to do so,” the Business Times reported. “The 25 per cent who do top up contribute an average of 17 per cent of their monthly personal income, in addition to their mandatory contribution.”
The CPF scheme has come under fire in recent months, especially after the Minimum Sum was raised by S$7,000 – from S$148,000 to the current S$155,000.
Several well-attended protests held at Hong Lim Park over the issue have also lent support to calls for the Government to improve the scheme, and to allow Singaporeans to withdraw more of their CPF savings upon retirement at 55-years old.
The current draw-down age for the CPF is 62.
While the Government has said that it is confident workers will be able to meet the CPF Minimum Sum scheme, especially younger members, the findings by the Manulife survey seem to paint a different picture.
Manpower Minister Tan Chuan Jin said in 2012 that younger members “are likely to have more savings for retirement.”
“In fact, we expect the proportion of members who are able to meet the Minimum Sum to keep increasing,” he said then, “with some 70 per cent to 80 per cent of those working today meeting the inflation-adjusted Minimum Sum by the time they retire. And this is after paying for their homes.”
At the same, however, economists had warned that Singaporeans may not have enough for retirement after using the CPF to pay for their HDB flats.
Professor Hui Weng Tat of the Lee Kuan Yew School of Public Policy had published a study warning that young Singaporean graduates may not have enough CPF savings for their retirement. (See here.)
The Government later commissioned its own studies, through two professors at the National University of Singapore (NUS).
The professors found that in fact “younger Singaporeans who join the workforce today will have enough savings in their Central Provident Fund (CPF) to finance their retirement.” (See here.)
However, the professors cautioned that this is premised on three things:
- That the choice of home or flats of members must be within their means
- Members must re-invest any monies they withdraw from their CPF savings
- Members must continue to work for as long as they can
The Manpower Ministry described the professors' study thus:
"The study shows that the majority of young Singaporeans will receive adequate payouts in retirement. It also underscores that retirement adequacy is premised on individual responsibility. Individuals have to work consistently and make prudent decisions so as to set aside adequate savings for their retirement. In addition, the findings of the study are an important validation of the CPF system."
The Manulife survey findings come as Prime Minister Lee Hsien Loong is expected to reveal changes to the CPF scheme in his National Day Rally speech this weekend.
Do you agree that you have enough CPF savings for retirement? Vote here: Public Opinion.