29-02-2012, 07:45 AM
You mean the Ministers only realized this now?? Suffice to say CPF is woefully insufficient for retirement (due, in part, to the high housing prices which is draining everyone's OA). Everyone should think about investing their own money to obtain returns to grow one's wealth.
The Straits Times
Feb 29, 2012
budget debate: THE ELDERLY
CPF savings 'may not be enough for old age'
MPs call for rise in contribution rates for all over long term
By Rachel Chang
SINGAPOREANS may not have enough Central Provident Fund (CPF) savings for their retirement, MPs warned yesterday.
About a quarter of the parliamentarians who spoke on the first day of the Budget debate flagged this issue, saying the Government should relook how CPF funds can be boosted.
Three said the elderly and low-wage workers have worryingly meagre CPF savings. Three others insisted that CPF contribution rates must rise for all Singaporeans over the long term.
Said Mr Zainudin Nordin (Bishan-Toa Payoh GRC): 'Having more resources upon retirement would mean that workers will be less reliant on the Government for their needs later in life.'
Finance Minister Tharman Shanmugaratnam announced in his Budget statement last week that to boost the retirement savings of older workers, employers' CPF contribution rates for those aged between 50 and 65 would rise by up to 2.5 percentage points.
While praising the move, MPs suggested that it did not go far enough.
Ms Jessica Tan (East Coast GRC) wants the rise in contribution rates to also apply to workers above age 65. Older workers may be physically slower, she said, but competence often turns on knowledge and experience too.
Mr Zainudin suggested the Government raise the interest rates that CPF funds accrue. A rate of 2.5 per cent - what the CPF currently pays on funds in the Ordinary Account - will grow a $1,000 balance into $2,098 over 30 years. If the rate went up to 5 per cent, for example, it would grow to $4,322.
A higher interest rate would give older workers the means to a comfortable retirement, he added.
A CPF system less strictly tied to days spent at work was Non-Constituency MP Lina Chiam's wish.
In some countries, women can get 'pension credits' when they are on maternity leave, in recognition of their role as caregivers. The CPF model should be similarly evolved to build a better social safety net for women, she said.
Going one step further was Nominated MP Mary Liew, who said a Ministry of Health report in 1984 noted the Government's desire to ultimately raise the CPF contribution rate to 50 per cent, while delaying the age at which workers can withdraw those funds to 65.
The rate is currently 36 per cent, and the withdrawal age is 55.
She cited Lee Kuan Yew School of Public Policy economist Hui Weng Tat, who had produced figures showing that the current CPF contribution rate will not yield sufficient retirement funds - even before Singaporeans drain their accounts to pay for property purchases. He said 42 per cent would be a more sustainable figure.
Ms Liew also noted that when CPF contribution rates were slashed - as they were during economic crises in 1986, 1999 and 2003 - close to a decade passed before they were restored.
For a 30-year-old who earned $1,000 a month in 1985, this meant foregoing $30,000, excluding wage cuts and interest. 'This $30,000 would have meant a lot to our low-wage workers,' she said. 'The workers are the elderly of today, and because of their sacrifice, we have progressed as a nation to where we are today.'
Calling for the Government to review what a reasonable CPF rate would be for Singaporeans to retire with dignity, she concluded on a note of appeal: 'Please, no more CPF cuts!'
rchang@sph.com.sg
The Straits Times
Feb 29, 2012
budget debate: THE ELDERLY
CPF savings 'may not be enough for old age'
MPs call for rise in contribution rates for all over long term
By Rachel Chang
SINGAPOREANS may not have enough Central Provident Fund (CPF) savings for their retirement, MPs warned yesterday.
About a quarter of the parliamentarians who spoke on the first day of the Budget debate flagged this issue, saying the Government should relook how CPF funds can be boosted.
Three said the elderly and low-wage workers have worryingly meagre CPF savings. Three others insisted that CPF contribution rates must rise for all Singaporeans over the long term.
Said Mr Zainudin Nordin (Bishan-Toa Payoh GRC): 'Having more resources upon retirement would mean that workers will be less reliant on the Government for their needs later in life.'
Finance Minister Tharman Shanmugaratnam announced in his Budget statement last week that to boost the retirement savings of older workers, employers' CPF contribution rates for those aged between 50 and 65 would rise by up to 2.5 percentage points.
While praising the move, MPs suggested that it did not go far enough.
Ms Jessica Tan (East Coast GRC) wants the rise in contribution rates to also apply to workers above age 65. Older workers may be physically slower, she said, but competence often turns on knowledge and experience too.
Mr Zainudin suggested the Government raise the interest rates that CPF funds accrue. A rate of 2.5 per cent - what the CPF currently pays on funds in the Ordinary Account - will grow a $1,000 balance into $2,098 over 30 years. If the rate went up to 5 per cent, for example, it would grow to $4,322.
A higher interest rate would give older workers the means to a comfortable retirement, he added.
A CPF system less strictly tied to days spent at work was Non-Constituency MP Lina Chiam's wish.
In some countries, women can get 'pension credits' when they are on maternity leave, in recognition of their role as caregivers. The CPF model should be similarly evolved to build a better social safety net for women, she said.
Going one step further was Nominated MP Mary Liew, who said a Ministry of Health report in 1984 noted the Government's desire to ultimately raise the CPF contribution rate to 50 per cent, while delaying the age at which workers can withdraw those funds to 65.
The rate is currently 36 per cent, and the withdrawal age is 55.
She cited Lee Kuan Yew School of Public Policy economist Hui Weng Tat, who had produced figures showing that the current CPF contribution rate will not yield sufficient retirement funds - even before Singaporeans drain their accounts to pay for property purchases. He said 42 per cent would be a more sustainable figure.
Ms Liew also noted that when CPF contribution rates were slashed - as they were during economic crises in 1986, 1999 and 2003 - close to a decade passed before they were restored.
For a 30-year-old who earned $1,000 a month in 1985, this meant foregoing $30,000, excluding wage cuts and interest. 'This $30,000 would have meant a lot to our low-wage workers,' she said. 'The workers are the elderly of today, and because of their sacrifice, we have progressed as a nation to where we are today.'
Calling for the Government to review what a reasonable CPF rate would be for Singaporeans to retire with dignity, she concluded on a note of appeal: 'Please, no more CPF cuts!'
rchang@sph.com.sg