Written Answer by Mrs Josephine Teo, Minister for Manpower, to PQ on retirement adequacy
NOTICE PAPER NO. 1888 OF 2019 FOR THE SITTING ON 04 NOVEMBER 2019
QUESTION NO. 3280 FOR WRITTEN ANSWER
MP: MR LIANG ENG HWA
To ask the Minister for Manpower (a) what is the state of retirement adequacy for current and future cohorts of retirees of different income profiles; and (b) what are the projected average monthly CPF Life payouts which each of these income groups are expected to receive when reach payout eligibility age.
- Members are likely to have a combination of means to fund their retirement, of which CPF is a component. The others include private savings, housing monetisation through the Lease Buyback Scheme, as well as support from their family. Nonetheless, with the Basic Retirement Sum (BRS) designed to provide members with monthly payouts in retirement that cover their basic living expenses, the BRS attainment is one indicator for retirement adequacy. Over the last decade, the proportion of active CPF members attaining their cohort BRS at age 55 has improved from about 2 in 5 to more than 3 in 5.
- We are optimistic that retirement adequacy will continue to improve for younger cohorts. Among other things, their CPF balances have grown with rising incomes and labour force participation. This can translate to higher CPF monthly payouts in retirement.
- In fact, a recent study by the Ministry of Finance (MOF) showed that the median real income of younger Singaporeans born in the 1970s was double compared to those born in the 1950s when both were in their 40s. The younger generation also had a labour force participation rate 10 percentage points higher. As a result, the median real Ordinary and Special Account CPF balances of the younger generation was three times higher than the older generation, with balances at the 20th percentile more than seven times higher.