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Phase out the minimum sum component of the Central Provident Fund (CPF), suggested opposition politicians from the National Solidarity Party (NSP) Friday night at a press conference Friday where they unveiled a paper aimed at reforming the existing scheme.
Titled “Re-Visioning the Central Provident Fund Scheme with 6/6 Clarity” and presented by NSP secretary-general Jeannette Chong-Aruldoss together with members Ravi Philemon and Bryan Long, the paper focused on six proposed changes to the CPF scheme based on six guiding principles.
The scrapping of the MS component was the last of the six suggestions in the paper made with the aim to “re-vision” and improve the CPF system by placing the responsibility of the CPF scheme to support retirement on three parties – the employee, the employer and the Singapore government.
The release of the paper comes after protests at Hong Lim Park more than a month ago against the CPF.
According to Chong-Aruldoss, the NSP Paper on the CPF scheme was crafted after consultation with members of the public as well as internal discussion.
“The leaders from the ruling Party have lamented their lack of foresight and that only hindsight is 20/20, or 6/6 vision,” said Chong. “NSP believes that discussion on CPF should move from retirement adequacy to supplementing retirement incomes.”
Distinguish CPF contributions
The NSP proposed that employee contributions be credited only to their Ordinary Accounts (OA) , while employer contributions would be made strictly to the employee’s Medisave Account (MA) and Special Account (SA).
Monies in the OA would be accessible to employees for investing in financial products classified by the CPF board as low or medium risk and the principal protected.
Besides making investments, the employee would also be allowed to withdraw from the OA to pay for housing and education and given the option to withdraw the entire sum at the age of 55.
This suggestion, said NSP member Bryan Long, was based on the party’s principle that employees should have control over the money deposited in their OA.
On the other hand, employers would contribute to MA and SA, making them directly responsible for ensuring that their employees continue to enjoy post-employment benefits and have access to basic medical care.
Long added that the monies in MA and SA should earn a higher interest than in the OA as they could not not be withdrawn.
Raise employer CPF contribution
Pointing out that countries like Malaysia, Hong Kong and Indonesia all enforced equal employer and employee contribution rates to their respective funds, Long put forth that the same should be done in Singapore to distribute the responsibility of support evenly between the two.
Acknowledging that this may adversely affect businesses by increasing labour costs, Long suggested that the employer’s contribution be raised gradually over a period of five years.
The NSP also rejected the government’s rationale that CPF contribution rates for older workers should be reduced to help them stayed employed, saying that skill sets, salary benchmarks and variable wage components have made a seniority-based wage system obsolete.
Enhance top-up schemes
NSP also proposed the top up of low-income members’ CPF accounts to a “subsistence retirement income” while giving them basic medical benefits.
Calling for an official study to be done defining poverty in Singapore to determine subsistence retirement income levels, the NSP argued that the $1.36 billion spent on grants and subsidy schemes already in effect have met the needs of certain low-income earners but had not provided for subsistence-level monetary support for the elderly.
Finally, NSP proposed the scrapping of the controversial minimum sum component.
“With the implementation of the first five proposals, members will have sufficient amounts in their CPF accounts to supplement their retirement income,” said Long. “The minimum sum scheme would then be redundant and can be phased out.”
The minimum sum for CPF members who turn 55 between the start of July this year and the end of June next year was raised to $155,000 from $148,000.
The Ministry of Manpower and the CPF board explained that the hike was to accommodate the “rising expectations of what is considered a basic standard of living in retirement”.
https://sg.news.yahoo.com/scrap-cpf-minimum-sum--nsp-022953475.html
Titled “Re-Visioning the Central Provident Fund Scheme with 6/6 Clarity” and presented by NSP secretary-general Jeannette Chong-Aruldoss together with members Ravi Philemon and Bryan Long, the paper focused on six proposed changes to the CPF scheme based on six guiding principles.
The scrapping of the MS component was the last of the six suggestions in the paper made with the aim to “re-vision” and improve the CPF system by placing the responsibility of the CPF scheme to support retirement on three parties – the employee, the employer and the Singapore government.
The release of the paper comes after protests at Hong Lim Park more than a month ago against the CPF.
According to Chong-Aruldoss, the NSP Paper on the CPF scheme was crafted after consultation with members of the public as well as internal discussion.
“The leaders from the ruling Party have lamented their lack of foresight and that only hindsight is 20/20, or 6/6 vision,” said Chong. “NSP believes that discussion on CPF should move from retirement adequacy to supplementing retirement incomes.”
Distinguish CPF contributions
The NSP proposed that employee contributions be credited only to their Ordinary Accounts (OA) , while employer contributions would be made strictly to the employee’s Medisave Account (MA) and Special Account (SA).
Monies in the OA would be accessible to employees for investing in financial products classified by the CPF board as low or medium risk and the principal protected.
Besides making investments, the employee would also be allowed to withdraw from the OA to pay for housing and education and given the option to withdraw the entire sum at the age of 55.
This suggestion, said NSP member Bryan Long, was based on the party’s principle that employees should have control over the money deposited in their OA.
On the other hand, employers would contribute to MA and SA, making them directly responsible for ensuring that their employees continue to enjoy post-employment benefits and have access to basic medical care.
Long added that the monies in MA and SA should earn a higher interest than in the OA as they could not not be withdrawn.
Raise employer CPF contribution
Pointing out that countries like Malaysia, Hong Kong and Indonesia all enforced equal employer and employee contribution rates to their respective funds, Long put forth that the same should be done in Singapore to distribute the responsibility of support evenly between the two.
Acknowledging that this may adversely affect businesses by increasing labour costs, Long suggested that the employer’s contribution be raised gradually over a period of five years.
The NSP also rejected the government’s rationale that CPF contribution rates for older workers should be reduced to help them stayed employed, saying that skill sets, salary benchmarks and variable wage components have made a seniority-based wage system obsolete.
Enhance top-up schemes
NSP also proposed the top up of low-income members’ CPF accounts to a “subsistence retirement income” while giving them basic medical benefits.
Calling for an official study to be done defining poverty in Singapore to determine subsistence retirement income levels, the NSP argued that the $1.36 billion spent on grants and subsidy schemes already in effect have met the needs of certain low-income earners but had not provided for subsistence-level monetary support for the elderly.
Finally, NSP proposed the scrapping of the controversial minimum sum component.
“With the implementation of the first five proposals, members will have sufficient amounts in their CPF accounts to supplement their retirement income,” said Long. “The minimum sum scheme would then be redundant and can be phased out.”
The minimum sum for CPF members who turn 55 between the start of July this year and the end of June next year was raised to $155,000 from $148,000.
The Ministry of Manpower and the CPF board explained that the hike was to accommodate the “rising expectations of what is considered a basic standard of living in retirement”.
https://sg.news.yahoo.com/scrap-cpf-minimum-sum--nsp-022953475.html
