Flexibility comes with risks

THE first set of proposals by the CPF Advisory Panel to revamp Singapore's retirement system, with its accent on flexibility and individual choice, has been generally welcome. But there are some questions to think about too.

A key one is the part property plays in terms of retirement adequacy. The recommendations will allow those owning property and have a CPF charge on the property to withdraw, at 55, savings in excess of the proposed Basic Retirement Sum of S$80,500, while those without would have to meet the Full Retirement Sum of S$161,000.

This was presented as a "reframing" of current requirements. Currently, there is a minimum sum requirement of S$161,000, which will be used to pay for the CPF Life annuity scheme. However, whether they have enough to meet the minimum sum requirement or not, people can choose to pledge their property for up to S$80,500. The excess cash can then be withdrawn. The property pledge, in some ways, was commonly seen as a concession. Ideally, people should be leaving S$161,000 in the system to fund their retirement payouts.