Minister Ng addresses MPs’ worries about CPF changes, urges them to convince people
LOH CHEE KONG
ANY tinkering with the Central Provident Fund (CPF) system, the savings nest for Singaporeans’ golden years, was bound to be greeted with fear and uncertainty – especially if it meant resetting a system more than half a century old.
Mindful of this, Manpower Minister Ng Eng Hen, the man tasked to implement the changes, made an impassioned plea yesterday for his Parliamentary colleagues to sell the new policies to the ground.
Or, in his own words, to “engage hearts, hold hands and assuage fears”.
As he wrapped up a three-day debate involving about 40 Members of Parliament (MPs), Dr Ng was convinced the Government was making all the right moves – as far as the CPF reforms were concerned.
But “pristine policies” alone were not enough. The Government, he admitted, needed to “be better at PR to sell our policies”, as some MPs had highlighted.
He told the House: “I need you to spout poetic lines to convince your constituents that these measures are meant to help them. Spew forth with passion your Hokkien lyrics and poetic metaphors.”
To deal with the rapidly-ageing population, the Government will put in place re-employment laws by 2012. In the same year, the draw-down age for the CPF Minimum Sum will rise to hit 65 by 2018.
From next year, the interest rates for the Special, Medisave and Retirement Accounts (SMRA) will be re-pegged to the yield of 10-year Singapore Government Securities, plus an extra 1 percentage point.
The CPF Board will also administer a longevity insurance, with the details still to be worked out by a special committee.
The sweeping changes were inevitable. “There is no other way,” said Dr Ng. “We are changing the CPF because we are compelled
to, by circumstances unimaginable and unanticipated when the CPF system was started 50 years ago. A system designed in 1955 for an average life expectancy of 61, left unattended, would falter under the weight of needs as more grow old.”
But while each Singaporean will be expected to make provision for his own needs, the Government will not leave them to fend for themselves, he asserted.
A number of MPs had voiced concern over the delayed drawdown age and that Singaporeans could face hardship if re-employment failed to work.
To many Singaporeans, their CPF monies was becoming “a bit of a mirage”, charged Non-Constituency MP Sylvia Lim, who also took issue with the timing of the reforms.
The Workers’ Party chairman argued: “How can we agree to delay the drawdown age now when these details (of the re-employment laws) are up in the air? Will the new laws be just a piece of paper?”
In response, Tampines GRC MP Sin Boon Ann countered that allowing Singaporeans to draw down their CPF funds earlier would be a “disincentive” to continue working in their old age.
Pointing out that some companies were already adopting re-employment practices, Dr Ng assured Parliament that the parties involved in drafting the legislation were acutely aware that it “has to work”.
Said Dr Ng: “Some (MPs) suggested that the re-employment law be enacted well before 2012. Laws assist but there are no shortcuts. We will work on guidelines first and gauge the process.”
On some MPs’ calls for “even higher risk-free interest rates” on SMRA accounts, Dr Ng described such a demand as “too good to be true”.
Reiterating that 70 per cent of all CPF members would effectively enjoy a 3.5-percent rate on their Ordinary Account and 5 per cent on their SMRA, he said: “It is easy to claim that our investments should do better, but who dares to promise you this? No one will be willing to underwrite this system simply because it is more than fair.”
There is no risk-free asset that guarantees a 2.5-per-cent minimum return per annum, “let alone a 3.5-per-cent minimum return”, said Dr Ng. And top consultants engaged by the Government affirmed this, he added.
Nominated MP Siew Kum Hong had cited the example of Aviva’s Big e fund. But Dr Ng pointed out the firm gives the money back to the investor should the returns fall below 2.5 per cent – it does not give a guarantee.
Said Dr Ng: “For our system, there is no fine print – and that’s the bottom line.”
As for those who do not pay CPF, such as odd-job labourers, contract workers and housewives, Dr Ng pointed out that there were help schemes such as additional housing grants, Workfare and Comcare.
Under the new CPF system, 84 per cent of new entrants to the workforce would have enough to meet the Minimum Sum for retirement, even for low wage earners and “even after buying their first home”, said Dr Ng.
Praising the “high quality debate” in the House over the past three days, Dr Ng described the Government’s most pressing challenge as somewhat of a happy headache.
Said Dr Ng: “We could not have imagined 40-odd years ago when this nation was conceived, that we would be here in 2007 discussing how to deal with the problem of people living longer.”
And he was in no doubt that future generations would thank the Government of today for having the “resolve and courage to do what was necessary”.
Said Dr Ng: “How will we be judged? It is hard to be completely sure. But of this one thing I can be reasonably sure that they will conclude: that this Government did not shirk its responsibility but lived up to its duty.”