A more flexible retirement scheme
SINGAPORE residents can look forward to a more flexible national retirement scheme that allows them to customise different levels of savings and payouts.
A lump sum withdrawal at age 65, of up to 20 per cent of their Central Provident Fund (CPF) savings, is also on the cards.
It marks a departure from fixed monthly payouts, as a government-appointed panel offered proposals yesterday to improve the CPF system.
The Government has accepted the panel's report, said Manpower Minister Tan Chuan-Jin yesterday. Details will be announced at the Budget debate next month.
The recommendations, made amid calls to change the CPF system, will shift the fund from a largely fixed retirement formula for all, to one that gives members more control over their retirement savings.
"The CPF is fundamentally a sound system, which helps Singaporeans prepare for retirement," said panel chairman Tan Chorh Chuan when he presented the proposals yesterday.
Now, all CPF members must meet a standard Minimum Sum at age 55. The amount, which is $155,000 and increases to $161,000 in July, is locked away until age 65, when CPF members start receiving a monthly payout.
The biggest change is to offer a choice of three different levels of the Minimum Sum. CPF members can choose to lock away a basic sum of $80,500, a higher sum of $161,000 or an enhanced sum of $241,500 at age 55. The monthly payouts at age 65 range from $650 to $1,900.
They can also withdraw any amount above the basic sum, provided they are property owners.
But the basic retirement savings will have to be increased each year for every new batch of CPF members who turn 55 after next year, to adjust for inflation and higher standards of living. The panel suggested a 3 per cent hike each year from 2017 to 2020, for a start.
Those who postpone their monthly payouts past age 65 should be rewarded with larger permanent monthly payouts, the panel said.
It also proposed allowing the withdrawal of up to 20 per cent of retirement savings at age 65, giving members more flexibility with their savings, a cap first suggested by Prime Minister Lee Hsien Loong at last year's National Day Rally.
The panel also wants incentives to encourage members to top up the accounts of their spouses and family members who have only small amounts in their CPF accounts, so that they too have a steady retirement income.
It is working on a second set of proposals on CPF payouts and returns, which will be submitted to the Government in the middle of the year.
The National Trades Union Congress welcomed the proposals but urged the Government to also look into areas outside the scope of the panel's review such as raising the $5,000 salary ceiling from which CPF contributions are calculated, and raising the CPF contribution rates of older workers.