CENTRAL PROVIDENT FUND MINIMUM SUM (Percentage of members meeting criteria)

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CENTRAL PROVIDENT FUND MINIMUM SUM:

(Percentage of members meeting criteria): 11.

Ms Eunice Elizabeth Olsen asked the Minister for Manpower (a) what percentage of Central Provident Fund (CPF) members who turned 55 years of age last year met the Minimum Sum criteria; (b) what was the average amount in the CPF savings of such members; (c) how do these figures compare to previous years; (d) what are the main reasons why CPF members do not meet the Minimum Sum; (e) what is being done to ensure that more members will meet the Minimum Sum when they turn 55.

The Minister for Manpower (Dr Ng Eng Hen): Sir, of active CPF members who

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turned 55 last year, 40% of them were able to set aside the Minimum Sum. This was $90,000, the Minimum Sum requirement last year. The $90,000 comprises half in cash and half in a property pledge. I would like Members to note that this 40% was after withdrawing 50% of their net balances at 55. Of this group that set aside the Minimum Sum, half did so fully in cash and did not use a property pledge. Among all active CPF members that turned 55 last year, the median Ordinary Account and Special Account cash balance before applying the 50% withdrawal rule was more than $66,400. The percentage of active CPF members who met the Minimum Sum last year is unchanged, compared to 2004.

Whether members can meet the Minimum Sum at age 55 depends on many reasons. Those who work longer and contribute regularly to their CPF, who were prudent in property purchases and had less medical expenses would be best able to meet this Minimum Sum level. The Minimum Sum is being raised to cater for increasing life expectancy and will reach $120,000 in 2003 dollars by 2013.

We must help Singaporeans work longer so that they can put aside more in their CPF. The Government has accepted the recommendations of the Tripartite Committee for the Employability of Older Workers chaired by Mr Gan Kim Yong. To enhance returns on CPF savings, we have recently announced measures to tighten the CPF Investment Scheme to reduce costs and improve the quality of products within this scheme. The CPF Board has also formed an International Advisory Panel to study ways to enhance the retirement adequacy of members in the long term.

Ms Eunice Elizabeth Olsen (Nominated Member): Sir, if only 40% of people are managing to meet the Minimum Sum, can the Minister suggest how our elderly are going to be able to cope with their

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retirement needs, considering the fact that we have an ageing population, and whether or not the CPF system is adequate to meet our population's retirement needs?

Dr Ng Eng Hen: Sir, that was why I was careful to insert a number of caveats. But I accept that there are sometimes too many figures.

I said 40%, after withdrawing the 50% that they are allowed to. Hon. Members would remember, we are slowly phasing out that 50% withdrawal rule, and that would raise the proportion of members who reach the Minimum Sum. Indeed, I gave the figure that, of all those before they applied for 50% withdrawal, ie, before they took out their 50%, the median balance was actually $66,000, which is quite healthy.

How can we help older members save enough for their CPF? As I said, there are many reasons. Of the many ways, one way is to allow them to work longer and contribute regularly. This is a simple enough assertion but, as Members will remember, from the recommendations of the Tripartite Committee for the Employability of Older Workers, there are a number of measures that we want to institute to help older workers work longer. We are at the same time raising the level of the Minimum Sum so that older members can put aside more to cater for their increasing life expectancy. There are no easy answers in terms of how do we help members enhance their retirement adequacy. But, as we have said, for those who are prudent in their property purchase and have less medical expenses, our data suggest that they are best able to meet their Minimum Sum. So there are a number of measures concurrently applied, eg, education on how much they should use for their

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housing, how they can stretch their Medisave dollar, how they can work longer, and in terms of being prudent in their investment choices, I think all these collectively will help to enhance their retirement adequacy.

Mr Speaker: Miss Olsen, last question.

Ms Eunice Elizabeth Olsen: Sir, I would just like to ask the Minister how much inter-agency communication is there between the Ministry of Manpower and the Ministry of National Development with regard to this, and whether or not the CPF Board's concerns are reflected to the HDB.

Dr Ng Eng Hen: Sir, I do not presume to speak on behalf of HDB because that is not under my Ministry, but let me just say that they are equally concerned. From policies that have already applied, in terms of advising members and assessing credit withdrawal, we have put in a number of structural aspects. This is an evaluation on how much members can withdraw from their CPF, for example. That is one hard figure.

The second aspect is to counsel or educate members before they buy the property. We have a number of avenues. One is HDB staff. The other is CPF independently having a website or a counter for members to calculate how much they can afford to buy in terms of their housing.