Minimum sum continues to increase to $181,000 while PMETs are being retrenched

by Vincent Low

According to a new update on CPF website, the new Minimum Sum (or newly termed as Full Requirement Sum) is now mandated to be $181,000 for those who turned 55 in the year 2020:

 

The government has said that the Minimum Sum needs to be increased yearly to take into account of inflation. However, the increase appears to be not following exactly according to the rate of inflation:

For example, the increase in Minimum Sum seems to be set at $5,000 for those sums after 2017.

Increase in real incomes?

In theory, Singaporeans are supposed to be able to cope with the increase in Minimum Sum because wages are supposed to increase from year to year, thereby, allowing Singaporeans to accumulate enough CPF to cope with the increase in Minimum Sum.

Indeed, the govt has been actively putting out words to "assure" the public:

"The majority of Singaporean workers and households have seen growth in their real incomes in the five-year period from 2007 to 2012. Real income growth in 2007-2012 was also stronger than in the earlier five-year period of 2002-2007."

But such words give scant comfort to those who have been retrenched especially among the older PMETs, who have to take on lower paying jobs like driving a taxi or selling insurance or properties just to make $2 to $3K a month.

Retrenched PMETs driving taxis and selling properties and insurance

For example, former GM from the oil and gas industry, Mr Long Khin Keong, used to earn $15,000 a month. These days he takes eight months to earn that much as a taxi driver. He has been struggling to find a suitable job.

"Hopefully somebody 'up there' reads this and improves the predicament of many like myself," he told Straits Times in an interview. "I'm not asking to become a GM again, I just want to be somewhere I can contribute with my experience."

Another person interviewed was Mr Desmond Tan, who was once the head of Asia sales at a European bank. He used to earn more than $25,000 a month, but now has to settle for commissions of about $3,000 as a property agent.

After he was retrenched, he tried to get a job back in the banking industry but was turned away from bank to bank. Some even told him that he was "over-qualified" for the positions they were offering, given his over two decades of experience.

"I used to deal with money that numbered in the millions," Mr Tan said. But now his fees come only in the hundreds.

Both Mr Long and Mr Tan are not alone in joining the group of PMETs who had earned good salaries before they were retrenched. And now both are struggling to make a decent living given that they have a family to take care of.

In this regard, CPF confirmed with ST that even though they do provide data for re-employment rates, they do not track the difference in wages for the new jobs.

At the current rate of increase in Minimum Sum, it would end up as $321,000 in 2048. This is assuming that the person is 25 years old and starting out to work this year. He would then hit 55 at 2048. In his next 30 years of working, he must also pray that he would not be replaced and end up driving taxi or selling properties or insurance with a significantly lower pay like Mr Long and Mr Tan.
This entry was posted in Opinion.
This entry was posted in Opinion.