Many CPF members ask for the right to withdraw their CPF in full at age 55. This was the provision prior to 1987. In 1987, the mininum sum scheme was introduced to hold back a portion of the CPF savings.
The minimum sum started at $30,000 in 1987 and had been increased over the years. It is now at $181,000 and will continue to be adjusted upwards every year.
A large percentage of CPF members (maybe more than half) is not able to meet the minimum sum. In effect, they are not allowed to withdraw their CPF savings except for a small sum of $5,000 at age 55.
Many of these CPF members are aggrieved. They want to withdraw their CPF savings at 55 as originally promised.
I like to give my view on this matter.
Life expectancy has improved. It will be too early for the CPF savings to be withdrawn at 55. But I suggest that the CPF savings should be allowed to be withdrawn in full at 65.
This means that the minimum sum scheme should be scrapped.
CPF members can continue to keep their savings in the CPF after age 65 or invest in CPF Life. This should be made voluntary.
My approach is - do not make CPF Life compulsory, make it attractive.
CPF can offer attractive terms to encourge members to invest in its CPF Life scheme (which is a life annuity). This can be achieved by operating the scheme on a not-for-profit basis and keeping the administrative expenses low and investing the funds in government bonds yielding 4% p.a.
Some people may opt to withdraw their CPF savings fully at 65. They have their reasons. Let them make the decision that suit their own financial planning.
There is a risk that some of the retirees will squander away their savings. We have to accept this risk. We can only reduce it through financial counselling.
We can simplify the CPF scheme by removing the minimum sum scheme. Currently, there are too many confusing regulations involve in managing the minimum sum scheme.
Tan Kin Lian
The minimum sum started at $30,000 in 1987 and had been increased over the years. It is now at $181,000 and will continue to be adjusted upwards every year.
A large percentage of CPF members (maybe more than half) is not able to meet the minimum sum. In effect, they are not allowed to withdraw their CPF savings except for a small sum of $5,000 at age 55.
Many of these CPF members are aggrieved. They want to withdraw their CPF savings at 55 as originally promised.
I like to give my view on this matter.
Life expectancy has improved. It will be too early for the CPF savings to be withdrawn at 55. But I suggest that the CPF savings should be allowed to be withdrawn in full at 65.
This means that the minimum sum scheme should be scrapped.
CPF members can continue to keep their savings in the CPF after age 65 or invest in CPF Life. This should be made voluntary.
My approach is - do not make CPF Life compulsory, make it attractive.
CPF can offer attractive terms to encourge members to invest in its CPF Life scheme (which is a life annuity). This can be achieved by operating the scheme on a not-for-profit basis and keeping the administrative expenses low and investing the funds in government bonds yielding 4% p.a.
Some people may opt to withdraw their CPF savings fully at 65. They have their reasons. Let them make the decision that suit their own financial planning.
There is a risk that some of the retirees will squander away their savings. We have to accept this risk. We can only reduce it through financial counselling.
We can simplify the CPF scheme by removing the minimum sum scheme. Currently, there are too many confusing regulations involve in managing the minimum sum scheme.
Tan Kin Lian
No comments:
Post a Comment