CPF under review to better buffer against inflation: Manpower Minister
SINGAPORE — The Government is reviewing the Central Provident Fund (CPF) to better buffer against inflation and more announcements will be made later on, said Manpower Minister Tan Chuan-Jin today (July 22).
Speaking at the Institute of Policy Studies conference on CPF and Retirement Adequacy, Mr Tan said concerns about inflation impacting retirement adequacy are valid.
He noted that one of the measures the Government has put in place to guard against inflation is the interest rates from monies in the CPF accounts. For example, interest rate is up to 3.5 per cent for the Ordinary Account and up to 5 per cent for the Special, Medisave and Retirement accounts.
Commenting on the CPF interest rates, Mr Tan said: “Apart on your returns on savings in CPF, (it) is also meant to address some of the concerns on inflation.”
He added: “But (inflation) is a valid concern, (and) that is one area we have been looking at, to explore how best we address some of these concerns for the long term. It is something we will be making some announcements on.”
Mr Tan also said that the Government is reviewing how the CPF Minimum Sum is being calculated, which will in turn affect how much the Minimum Sum should be raised against inflation.
The CPF Minimum Sum is currently pegged to inflation using the Consumer Price Index and adjustments are made every year.
Responding to a question on whether it is fair to include the imputed rent component in the Consumer Price Index, Mr Tan said that “we may want to consider not including” imputed rent when computing Singapore’s inflation rates.
Imputed rental, which rises in line with the property market cycle, is what home owners would pay if they were renting out their homes.
CLARIFICATION: The article earlier said that the Government is reviewing CPF interest rates. This is wrong. The Government is reviewing ways to better buffer the CPF against inflation and CPF interest rates is one of the ways currently used to guard against inflation.