[SINGAPORE] The Central Provident Fund (CPF) system may not be perfect, but it remains a valid system today, Manpower Minister Tan Chuan-Jin said in Parliament yesterday.
There are trade-offs Singaporeans need to contend with, he said, given that the CPF system does not afford its members "full flexibility" in making use of their money - and with good reason.
"Ultimately, the CPF allows us to have peace of mind because you do have a constant stream of income at the point of retirement and it ensures that will continue, rather than you having to depend on someone else or the state," he told the House on the fourth day of the debate on President Tony Tan Keng Yam's recent address at the reopening of Parliament.
Over the week, several Members of Parliament have urged the government to do more to improve CPF returns; others have called for more alternative investment options to be made available.
Yesterday, Hougang MP Png Eng Huat of the opposition Workers' Party joined the debate, proposing a third CPF Life plan that gives a monthly payout from an early drawdown age of 60.
In his speech, Mr Tan noted that the CPF system has to cater to three main needs - namely housing, healthcare and retirement adequacy - so any move to allow CPF monies to be withdrawn earlier would cause concern.
"Ultimately, this is not about shifting risk to the people; it's about shifting risk to our children's generation," he warned. "The responsible thing to do may not always be the most popular, but to take into consideration these fundamental changes that are facing our society."
Not only are people living longer and working until a later age, Singapore has to deal with a smaller base of taxpayers in the future, the minister said.
As life expectancy goes up, the focus of the CPF system is to ensure that "we can live long, but we can live well as well".
One way to help people build their retirement kitty is to give them the option to work longer if they want to do so, he said.
"Raising the retirement age isn't about forcing people to work longer. If you don't want to, you can stop any time you wish. The fact of the matter is, we are living longer and staying healthier, and many people find working to be part of active ageing."
Mr Tan also spoke at length on some MPs' worries about whether the current rate of CPF returns was adequate, which he admitted was a "fair concern".
"Some have asked if CPF interest rates should be higher in order to withstand inflation. That's a fair consideration.
"Others have advocated higher returns, perhaps taking on more risk with CPF monies. But is that something we want to do?"
He noted that the existing CPF interest rates today are "far higher" than the equivalent rates provided by similar products in the market.
Still, he stressed, the government was studying this aspect in its plans to enhance the CPF Life annuity scheme, under which members receive payouts for the rest of their life.
On Wednesday, Prime Minister Lee Hsien Loong told the House that the government would look into improving the CPF and CPF Life schemes in such a way that the payouts would keep pace with the cost of living.
Lower-income groups who may not have very much tucked away in their CPF accounts would be given "stronger assurance" in retirement, he said.
Mr Lee will announce more details of the enhancements to CPF Life at his annual National Day Rally speech in August.