Percentage of CPF members meeting Minimum
Sum on the rise: Tharman
By S Ramesh | Posted: 05 March 2012 1701 hrs
SINGAPORE: The percentage of active
CPF members who meet their Minimum Sum at age
55 has been improving over the years, from 36 per cent in 2007 to
45 per cent in 2011.
Speaking in Parliament, Deputy Prime Minister and Manpower
Minister, Tharman Shanmugaratnam said this will improve with each
successive cohort, as educational profiles improve and lifetime
incomes rise.
He said among those starting work now, about 70 to 80 per cent
should be able to attain the current level set for the Minimum Sum
in cash, by the time they retired, adjusted for inflation, even
after they have withdrawn money for a home.
So, he said Singapore’s CPF system with
current contribution rates is broadly appropriate for most of the
younger generation of Singaporeans.
Mr Tharman also addressed MPs concerns if the minimum sum was
too high. He said the CPF aims to help
Singaporeans save up enough to meet a basic level of needs in
retirement.
The Minimum Sum (MS) that is to be set aside at age 55 is set at
a level necessary to meet the typical expenditure needs of retiree
households in the lower-middle income group.
It should also cover the needs of those in the 2nd quintile of
income, that is between the 20th percentile and 40th percentile of
households by incomes. It would therefore also cover the needs of
those in the lower, first quintile.
For middle-income households, while their spending in retirement
is usually higher, the CPF will still form an
important part of retirement savings, said DPM Tharman.
He however, explained that the minimum sum is not adequate to
support the expected needs of those in higher-income households,
and was not designed for that purpose. Those in higher-income
households would have private savings outside of the CPF to tap on.
Mr Tharman said: “If the CPF had to
support those needs, we would need much higher contribution rates
and a much higher Minimum Sum. It would be excessive for those in
the lower-half of incomes, and also mean less take-home pay to meet
their day-to-day expenditures.”
Going forward, Mr Tharman said one of the ministry’s tasks is to
ensure that most low-wage workers are in the CPF system.
If they are in casual jobs and are not receiving CPF from their employers as they should, they would lose
out on the Workfare Income Supplement and other government top-ups
to their CPF from time to time.
Mr Tharman said the ministry is stepping up its enforcement and
promotion efforts to ensure compliance with the CPF Act for low wage workers.
-CNA/ac
