CPF: Time for review?

THE Central Provident Fund (CPF) is a key pillar of Singapore’s social security system and serves to meet the retirement, housing and healthcare needs of Singaporeans. The Covid-19 pandemic has prompted discussions on whether the CPF model should be reviewed to provide increased support, with some comparing it with all-encompassing social security schemes in other countries that provide a social safety net.

However, many tend to forget that the CPF is really a savings scheme – what you put in, you receive back with interest. The intention of the CPF model, as opposed to the social security welfare model, is to encourage self-reliance. The Singapore government has long advocated active government support for personal responsibility, rather than active government support to take over personal responsibility.

The government plays a supporting role to ensure guaranteed returns in the CPF. At an interest rate of 2.5 per cent per annum on funds in the Ordinary Account and 4 per cent a year for monies in the Special Account for those under 55 years old, the return was much higher than the average bank interest available for many years until the recent interest rate hike.