Prime Minister Lee Hsien Loong’s remarks about letting Central Provident Fund (CPF) members withdraw part of their savings in a lump sum have raised worries among unionists.
At a dialogue with Mr Lee on Thursday, the unionists, according to the Straits Times, said this “will bring grief” to the very same group of people which should be protected – the low-wage earners – according to local news reports of the dialogue.
Mr Lee had made the proposal in his National Day Rally speech earlier in August.
“I think we should allow people the option to take out part of their CPF savings in a lump sum if they need to but subject to some limits,” Mr Lee said then. “The amount which you can take out cannot be excessive.”
He suggested that members could perhaps withdraw “up to 20 per cent of the total that you have and it should only be during retirement, 65 and beyond.”
Mr Lee, however, cautioned that there are downsides to this, and acknowledged what the unionists are now saying.
“We provide this flexibility but members must understand clearly the trade-offs because if you take out the lump sum, that means you will have less left in the CPF and your monthly payments will also be less,” he said. “So, that is a second thing we should do, make the CPF more flexible, and have the possibility of a controlled lump sum withdrawal in retirement.”
Mr Benjamin Tang, president of the Port Officers’ Union and member of NTUC central executive committee, who was at Thursday dialogue, told the media after the event, “The unions felt that basically, CPF should be something that is used for the retirement needs of workers.” He added, “By allowing (a lump-sum) to be withdrawn from the Minimum Sum, it will mean less for living expenses later on.”
According to Mr Tang, the prime minister gave assurance that there will be safeguards and that the CPF will “remain an institution that takes care of the retirement needs of workers.” (TODAY)
The dialogue was attended by some 550 unionists and the Minister of Manpower, Tan Chuan Jin, who was also at another dialogue with 140 people to discuss Mr Lee’s National Day Rally speech.
Mr Tan said that details of the changes to the CPF are expected to be announced in two weeks.
He added that issues being considered by the review panel included the degree of flexibility of withdrawals, addressing the uncertainty which plagues the CPF Minimum Sum, and how best to enhance support for the elderly.
On the Minimum Sum, which has caused much unhappiness among members because of its annual increases, Mr Tan said “the variable is inflation.”
“So if we perhaps settle it at 2 per cent every year, then I can actually give for sure. So we’re actually looking at it, whether we can just take that uncertainty out of the whole equation.”
He said that “if inflation turns out to be very erratic, then we will reset it again.”
“We are going to look at how we can be clearer,” he explained. “Basically it’s the uncertainty; the more certainty we have, the less anxiety… That’s something we are quite tempted to do but we will go through the review panel to see if it is something we want.”
Mr Lee had said in his speech that the Minimum Sum, which was raised on 1 July from S$148,000 to S$155,000, will be further increased to S$161,000 next year.
He said that he did not see the need for any more major increases in the MS beyond this, but added that “we will still need to adjust the MS from time to time.”