Straits Times: Sylvia Lim: Delink retirement age and CPF draw-down age

PARLIAMENT

BY LYNN LEE


‘A MIRAGE’?
“It seems to many that a member’s CPF money is becoming a mirage: A virtual pool of water which seems just ahead, but as one approaches, is found to be far away.”
NON-CONSTITUENCY MP SYLVIA LIM

THE retirement age and the age at which Singaporeans can draw down on funds in their CPF Minimum Sum accounts should be “delinked”, Non-Constituency MP Sylvia Lim said yesterday.

Although the opposition Workers’ Party she chairs does not object to extending the retirement age even up to 67, it could not support pushing back the age at which Singaporeans can draw on their retirement funds.

CPF members can currently draw down on their Minimum Sum starting at age 62.

But with changes announced this week, the bar will be raised to age 63 in 2012, 64 in 2015, and 65 in 2018, as people are encouraged to stay longer in the workforce and build up their retirement nest egg.

Ms Lim said Singaporeans would be affected in “profound ways” by this delay.

There were those wanting to “slow down”. But the delay in accessing their Minimum Sum was akin to pressure to keep on working at the same pace as before.

A later draw-down age could also cause financial hardship for those affected.

She argued that although the goal is to increase the employment rate among those aged 55 to 64, there was no certainty someone could keep a job – even with a re-employment law in place by 2012.

And even if they had work, she said it was likely they would earn less – and might not have enough to cover their expenses.

Many also suffered a cash crunch from age 55 onwards: With lower CPF contribution rates, they would take longer to build up savings. And having to set aside larger amounts in their Minimum Sum and Medisave, meant they have less they can withdraw at age 55:

“It seems to many that a member’s CPF money is becoming a mirage: A virtual pool of water which seems just ahead, but as one approaches, is found to be far away.”

One way to avoid a later draw-down on CPF funds would be for the Government to boost returns on CPF savings, so people would have more for retirement, she said.

Also, government coffers had grown, she said, citing how the taxman’s collection rose by more than $6 billion last year compared to five years ago.

Ms Lim’s call for allowing workers to draw on their retirement savings was criticised later by Mr Sin Boon Ann (Tampines GRC).

He said she had not addressed a fundamental issue: That if people drew on their CPF funds early, would they have enough to see them through their retirement.

He added: “How can she be sure that if there’s an opportunity for Singaporeans to draw down earlier, (they) will continue to want to work to ensure that there is sufficient income to meet their daily needs?”

Mr Low Thia Khiang (Hougang), who is Workers’ Party secretary-general, rose later and asked if Mr Sin was suggesting Singaporeans were lazy and would not work if they received their CPF funds – and the Government thus needed to hold on to their money.

Mr Sin countered that Mr Low was being “disingenuous” by for putting words in his mouth. He never said Singaporeans are lazy.

His said the point he was making was that early access to CPF funds could be a “disincentive” for Singaporeans to work actively.

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