The Singapore Democratic Party has urged the Government to return the Central Provident Fund (CPF) savings to retirees who need the money to survive, instead of raising the basic retirement sum.
The SDP’s call comes after Manpower Minister Josephine Teo hinted that the CPF basic retirement sum will continue to rise regularly.
The CPF, which is administered by the Central Provident Fund Board – a statutory board operating under the Ministry of Manpower responsible for investing contributions, has been described as “a forced savings scheme” for Singaporeans.
It has remained a hot button topic among citizens, especially after the Government deferred the original withdrawal age to 65 years old. Today, CPF members are unable to take out all of their CPF savings in a lump sum once they reach the retirement age.
Last Friday (Nov 15), ruling party minister Josephine Teo said the basic retirement sum should be regularly adjusted to keep pace with inflation and improvements in standards of living. While it is unclear whether the standard of living has improved for all Singaporeans, the costs of living have certainly risen over the years.
Responding to the Government’s position, the SDP said on Tuesday (Nov 19): “Since the CPF board was formed in 1955, The PAP government has forced us (to) give them our hard-earned money for “savings”. Since then, the CPF has been changed many times to suit the interests of the PAP government.
“Minister Josephine Teo has suggested that the CPF basic retirement sum should be regularly adjusted, as “the same payout feels inadequate”. The PAP takes OUR money, and Minister Teo tells us how much we can get back.
“The SDP has a better suggestion: return our hard-earned saving to retirees who need the money to survive. The PAP should keep their promises. Trust is not what you say. It’s what you do!”
Last month, SDP secretary-general Chee Soon Juan highlighted the plight of two senior citizens living in Bukit Batok on social media.
One resident, who is in his early 60s, told Dr Chee that he could not withdraw his savings even though he had S$274,000 in his CPF account. The elderly man told the opposition leader that he has to continue working even though he wishes to retire because he cannot get his retirement savings back.
Another resident, who is also in his 60s, told Dr Chee that he could not work for two years because of an illness. Desperate, he wrote to the CPF Board to release some of his savings to him so he could support himself but the CPF Board apparently refused.
The elderly man had to seek help from charity organisations to feed his family and continue paying the bills. To survive, his family also had to cut down their meals limiting it to twice a day.
Dr Chee wrote that these are “ordinary Singaporeans playing by the rules, paying their taxes but ending up after a lifetime of work unable to live in security. They face a government callous to their hardship, impervious to their pleas.”
Days later, on Oct 22, the CPF Board emailed Dr Chee and sought the contact information of the two senior citizens whose stories he had shared online. The authority wrote: “If you wish to help the two CPF members you cited, please let us know their contact details so that we may look into the matter. We look forward to receiving the details soon.”
Dr Chee subsequently issued a response to the CPF Board and criticised it for seeking the contacts of the seniors when they had allegedly approached the authority for assistance to no avail.
Calling the CPF Board’s request to now contact the seniors as incredulous since they were previously turned away, Dr Chee expressed his hope that the CPF Board’s request is not just a publicity stunt given the looming General Election.
The CPF scheme is a compulsory savings plan for working Singaporeans and permanent residents primarily to fund their own retirement, healthcare, and housing needs. An employment-based savings scheme, CPF requires employers and employees to contribute a mandated amount to the Fund each month.
At the age of 55, CPF members must set aside what the Government calls a “basic retirement sum” in their retirement account to receive monthly payouts. They can withdraw up to S$5,000 from their Special and Ordinary Accounts, or their CPF savings after they have set aside their Full Retirement Sum.
Those who are born in 1958 or after can also withdraw up to 20% of their Retirement Account savings from age 65 but this would reduce the amount of monthly payout they receive. Interestingly, the monthly payouts only start at age 65 – a decade after members are required to set aside the basic retirement sum.
Today, the basic retirement sum is raised each year in accordance with the CPF Advisory Panel’s recommendation in 2015 that the sum is increased by 3 per cent each year for members who turn 55 between 2016 and 2020, to account for long-term inflation and increases in the standard of living.
CPF members who turned 55 in 2016 had to set aside a basic retirement sum of $80,500, while those who turned 55 in 2017 had to set aside a sum of $83,000. The basic retirement sum for a CPF member who turns 55 this year is $88,000 and this amount will rise to $90,500 next year.
A CPF member who turns 55 next year and sets aside the basic retirement sum of $90,500 will receive $740 to $800 in lifelong monthly payouts from age 65 in 2030.