Panel proposes greater flexibility in CPF system

SINGAPORE — The advisory panel appointed to study Central Provident Fund (CPF)-related issues has recommended giving Singaporeans the option to keep more or less money in their Retirement Accounts, based on the size of payouts they want later in life.

The recommended sums range from half to 1.5 times the Minimum Sum of S$161,000 for those turning 55 from July.

It said Singaporeans retiring in 2026 should set aside enough retirement savings for basic payouts of S$650 to S$700 per month, and this means setting aside S$80,500 to pay for the CPF LIFE annuity scheme.

The proposed tweaks to the Minimum Sum include giving it a new name.

The Minimum Sum refers to savings in one’s CPF Retirement Account, created when he turns 55, from the transfer of his Special Account and Ordinary Account funds.

The 13-member advisory panel, appointed last September and chaired by National University of Singapore President Tan Chorh Chuan, submitted the first of two sets of recommendations to Manpower Minister Tan Chuan-jin on Sunday. The recommendations were released to the media today.

Set Basic Retirement Sum at S$80,500

The panel is proposing that the sum of S$80,500 for CPF members turning 55 in 2016 be called the Basic Retirement Sum. This Basic Retirement Sum should increase by 3 per cent each year for cohorts turning 55 from 2017 to 2020, to keep pace with inflation and changes in household expenditure.

For CPF members who are not homeowners or who do not have a CPF pledge on the their property (which refers to the sum of money that will go into his CPF account if he sells the property), the panel thinks they should set aside a sum of S$161,000 in 2016 – equivalent to the Minimum Sum for those turning 55 from July. This could be called the Full Retirement Sum, the panel said.

Those who want to put more into their Retirement Account for higher annuity payouts should be allowed to do so, felt the panel, which is proposing that they be allowed to have up to three times the Basic Retirement Sum to pay for CPF LIFE premiums (or S$241,500 in 2016).

 Allow lump sum withdrawal of 20% at age 65

Also addressed in its first set of recommendations is lump-sum withdrawal of CPF savings at the age of 65. The panel suggests allowing the withdrawal of up to 20 per cent of Retirement Account savings, inclusive of the S$5,000 that can be withdrawn from age 55.

In its letter to the Manpower Minister, the panel said it noted the desire of focus group participants for more assurance over future adjustments to the Minimum Sum, and for more choices in the CPF system for members.

Some CPF members may have low balances due to lower wages and fewer women working in the past, the panel noted. For this group, mechanisms outside of the CPF system – such as the proposed Silver Support scheme offering bonus payouts – may be needed.

On lump-sum withdrawals, the panel said it considered the desire of many to be able to access part of their CPF savings for various uses.

The second set of recommendations will be submitted later this year.