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CPF payouts aim to benefit members

Employment practices
  • The Straits Times (23 February 2019): Make full CPF payout at age 70
  • The Straits Times (26 February 2019): CPF policies should be simple and logical

CPF payouts aim to benefit members
- The Straits Times, 6 March 2019

  1. We thank Dr Ho Ting Fei and Mr Lawrence Loh for their views (“Make full CPF payout at age 70”, 23 Feb; “CPF policies should be simple and logical”, 26 Feb).
  2. This reply focuses on when CPF payouts start. We have already replied to their other questions, in a letter published on 2 Mar.
  3. Mr Loh asked why payouts start from 65 when the statutory minimum retirement age is 62.
  4. Age 62 is not the age workers must stop work, but the age when they are re-employed. Under the law, employers have to offer workers re-employment up to 67. In practice, well over 90% of eligible workers are re-employed at 62.
  5. As a result, the employment rate of seniors has risen steadily. Today, about four in ten seniors aged 65-69 are still working.
  6. Manpower Minister Josephine Teo recently announced that both the retirement age and re-employment age will be raised further. However, CPF members will still be able to start their payouts any time from 65.
  7. Dr Ho suggested starting payouts automatically at 65.
  8. It is a long-standing practice for members on the Retirement Sum Scheme to decide on when they wish to start their payouts. They can do so any time from 65. This is also the practice for members who join CPF LIFE from July 2015.
  9. We do not assume every member wants to start payouts at 65. There are in fact benefits to starting later.
  10. Members will earn more interest. For every year of deferral, members get up to 7% more in payouts. That is up to 35% more for five years of deferral.
  11. Starting payouts automatically at 65 means automatically denying members these benefits.
  12. CPF Board sends letters to inform members of these arrangements before they reach 65. If the member does not choose to start his payouts, CPF Board will remind them every year. It is therefore possible that many CPF members who do not start payouts at 65 have made a conscious choice.
  13. Nevertheless, some members may still not be familiar with the arrangements. CPF Board will improve outreach, to help them exercise an informed choice when to start their payouts.
  14. We encourage members to make an appointment online to visit any CPF service centres island-wide for personalised face-to-face advice. Members can also call the CPF Call Centre at 1800-227-1188.

Sim Feng-Ji
Divisional Director
Ministry of Manpower

Make full CPF payout by age 70 
- The Straits Times, 23 February 2019

  1. The issue of Central Provident Fund (CPF) payouts is of great interest to all Singaporeans since it concerns everyone's hard-earned money.
  2. Recent comments on the issue by Manpower Minister Josephine Teo raise a few questions (No change to CPF payout age: Josephine Teo, Feb 19).
  3. If the interest rate earned by CPF savings is indeed risk-free and well above market rates, then it stands to reason that many more people would opt for the deferment of payment.
  4. So why not make payouts automatically start at 65, or even earlier, especially since Mrs Teo said there was no advantage for the CPF Board or the Government to want members to defer payouts beyond 65?
  5. Let those who need the money receive it, and the rest can opt for the deferred payout and enjoy the attractive interest rate.
  6. Both sides get what they want in that scenario, and it seems unlikely that such an easily-explained change would take "a long while for people to get used to".
  7. There are also compelling reasons for not extending the final payout age beyond 70.
  8. According to the Department of Statistics (SingStat), the survival rates for Singapore residents drop steeply after 70.
  9. The payout at age 70 should include the entire Retirement Sum. The CPF Board should not hold on to the sums of every person who turns 70 and dispense it in monthly portions over the next 23 years until the person turns 93.
  10. According to SingStat, only about 30 per cent of Singapore residents are expected to be alive at 90. What merit is there, then, in not paying out the entire Retirement Sum at 70?
  11. There should be a more compassionate and practical consideration of the payout age based on life expectancy and the needs and entitlements of individuals.
    Policies should be user-friendly and flexible enough to change when necessary.

Ho Ting Fei (Dr)

CPF policies should be simple and logical
- The Straits Times, 26 February 2019

  1. I totally agree with Dr Ho Ting Fei's suggestions (Make full CPF payout by age 70, Feb 23).
  2. The Central Provident Fund's (CPF) rules and policies should be simple and logical, instead of being complicated, confusing and potentially contentious.
  3. If savings can be withdrawn from the Ordinary Account at the age of 55, then the same spirit should apply for the Retirement Sum, in that members should be able to withdraw it at the retirement age of 62.
  4. What is the rationale for starting payouts at the ages of 65 to 70, when the minimum retirement age is 62?
  5. And even if we were to accept that payouts must be made monthly even after the age of 70, we cannot assume that everyone will live beyond 90. Those that do are outliers, even with improved medical technology.
  6. Instead, look at the average lifespan, and compute monthly payouts up to that age, with the balance able to be withdrawn at the age of 70.
  7. Those who prefer to keep their savings in their CPF due to the interest rate can do so by opting in.
  8. Ultimately, CPF savings belong to the members, and they should have more say in how they can be used.

Lawrence Loh Kiah Muan