CPF Minimum Sum increases are meant to match retirement expenses, says Tan Chuan-Jin
Tan Chuan-Jin (File photo)
Manpower Minister Tan Chuan Jin says it would be irresponsible of the government to leave CPF rules unchanged for those who are younger.
Especially at a time when Singaporeans are living longer, and the things that retired households spend on are rising in quality.
Mr Tan was speaking in Parliament, where he clarified several issues related to the Minimum Sum.
Mr Tan says the Minimum Sum scheme was introduced 30 years ago to provide a stream of CPF payouts every month, instead of having them withdrawn in a lump sum.
"Only a basic amount necessary for retirement expenses is required, and you can withdraw your CPF savings above that in a lump sum."
While the Minimum Sum is raised periodically, Mr Tan says such increases are cohort-specific.
That means that once the Minimum Sum is set for a group of Singaporeans who turn 55, it will not change for the rest of their lives.
And Singaporeans are not required to top up their CPF savings to meet the Minimum Sum at age 55.
Nor do they need to sell their property to make up for any shortfall.
In fact, only half of the Minimum Sum needs to be set aside in cash.
Mr Tan says the rest can be withdrawn in the form of a property pledge.
He adds that the government is optimistic that younger workers will be able to attain the Minimum Sum because wages are growing and labour-force participation rates are increasing.
There are also enhancements to the CPF system to help members grow their savings.
As for concerns that some Singaporeans need to continue servicing their housing loans with CPF savings after 55.
Mr Tan says of those aged 55 and above, only one in 10 is still using his CPF for monthly instalments.
And only one in 20 has to meet his monthly instalment with some cash.
As to calls to give Singaporeans more flexibility to use their CPF savings, Mr Tan says it's a question of choice.
"The more flexibility we allow, the more that we deplete the CPF account -- what it means is that the monthly stream-out for individuals would be reduced."
On whether the CPF Draw Down Age could be raised when the re-employment age is raised, Mr Tan says this issue is under careful study.
And no conclusions have been reached.
-By John Yip
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