Percentage of CPF members meeting Minimum Sum on the rise: Tharman
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.
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current level set for the Minimum Sum in cash, by the time they retired, adjusted for inflation, even after they have withdrawn money for a home.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."
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.
