Caring Society - Addenda to President’s Address 2014

A 'Caring Society' must provide more for those with less: Govt
By Caryn Yeo, Channel NewsAsia, 20 May 2014

The Government today (May 20) released details expanding on the theme of building a “Caring Society” outlined by President Tony Tan Keng Yam in his address as Parliament reopened last Friday.

In an addenda statement issued today, the Government said that strengthening social safety nets will be a key area of focus for policymakers. “Our philosophy is upstream prevention, providing more for those with less and sharing the risks of life’s uncertainties so that no one has to deal with his problems alone,” it said.

For the low-income and vulnerable, the Ministry of Manpower will enhance support for training, job upgrading and career progression through initiatives such as the Workfare Training Support Scheme and the Progressive Wage Model in some sectors.

The ministry will also step up enforcement and promotion efforts to protect low-wage workers’ basic employment rights, CPF contributions and well-being.

The Ministry of Communications and Information will establish a digital inclusion fund to ensure that as many Singaporeans as possible can access more media platforms and e-government services, the statement said. Subtitles will also be required for all free-to-air content on TV, to benefit the deaf and elderly.

Support and funding for the social services sector will also be ramped up. Social Service Net - "an integrated information-sharing and case management system to provide more timely and seamless assistance" - will be rolled out by the Ministry of Social and Family Development, while 20 Social Service Offices will be completed by the end of next year to bring social assistance closer to residents.

In an effort to promote a nationwide spirit of giving, the Ministry of Culture, Community and Youth plans to work with community welfare organisations to encourage businesses to give back to society and expand volunteering opportunities for the public. It is also looking into ways to better respond to disputes between neighbours.

“Underlying this is the spirit of a caring society, where we care for one another and share the fruits of progress with all,” the Government said.

5 things to know from Day 2 of the Addenda to President's address
The Straits Times, 20 May 2014

President Tony Tan Keng Yam opened the new session of Parliament last Friday, mapping out the Government's priorities and policies for the rest of the term.

For a week starting from Monday, the ministries will unveil their respective plans in public statements, known as Addenda to the President's Address. After that, Parliament will sit, for a week, to debate these plans.

We summarise 5 keys things to know from Day 2 which focused on the theme "Caring Society":

CPF payouts must rise to match inflation, warn experts
By Charissa Yong, The Straits Times, 21 May 2014

THERE is a "missing ingredient'' in the Central Provident Fund and the CPF Life annuity schemes, finance experts said yesterday.

It is: Payouts need to rise with inflation to ensure Singaporeans have enough to retire on.

Another feature that they suggested needs fixing is letting people use too much of their CPF savings to buy a home. This would prevent young Singaporeans from locking up too much of their savings in property, a non-liquid asset which cannot be converted quickly into cash if needed, they said.

These are the main measures they proposed for the review of the two schemes which the Manpower Ministry (MOM) said yesterday it plans to undertake to strengthen Singapore's social safety nets.

The review is part of MOM's plan set out in the second addenda that spells out the broad direction in policies that President Tony Tan Keng Yam laid out last Friday for the rest of the Government's term in office.

Each day, a different theme of the addenda will be released, until Friday. On Monday, the motif was making Singapore a "nation of opportunities", while yesterday's was "A caring society", a goal that involves nine ministries.

Ensuring a comfortable retirement is an important feature of a caring society, noted the experts.

But providing for a higher monthly payout from CPF Life to match the expected rise in inflation will require the CPF minimum sum to be raised, said Professor Joseph Cherian of the National University of Singapore Business School.

This could be a political hot potato, as some people are unhappy about being unable to withdraw even more of their CPF money.

"The Government has to do its share for those 'left behind' who cannot save the requisite amounts," added Prof Cherian.

The cash-poor, asset-rich phenomenon underlines the experts' call for reducing the proportion of CPF savings for buying a home.

Currently, monthly CPF contributions are allocated to different uses according to age.

The bulk of younger Singaporeans' CPF goes into their Ordinary Accounts (OA), which can be used to buy property.

This proportion shrinks as they grow older, with more CPF funds going into personal funds for retirement and health care instead.

On a person's 55th birthday, any remaining OA funds, along with those in a Special Account, are put into a Retirement Account. This means the more that has been spent on housing, the less there is for retirement.

"The problem of digging into one's retirement savings to buy that dream HDB flat is that you may realise too late you don't have enough saved up," said Prof Cherian.

Experts such as Singapore Management University finance professor Benedict Koh noted that many seniors own their homes but some are reluctant to sell their flats or flats' leases for money.

He too wants contribution rates to Special Accounts raised and those to Ordinary Accounts lowered to minimise withdrawals for other purposes.

Everyone has part to play to ensure pioneers need not worry in old age
By Radha Basu, The Straits Times, 21 May 2014

AT NEARLY 49, Singapore may still be a young nation, but her people are ageing fast. There are nearly 405,000 people here aged 65 and above, up from around 250,000 a decade earlier.

President Tony Tan Keng Yam's assurance last week at the opening of Parliament, that the Government would strengthen safety nets and enhance retirement adequacy was no doubt welcome news to the growing ranks of grey.

The second part of the addenda to the President's Address released yesterday evening, titled "Caring Society", provided some details on government plans to bring greater peace of mind to ageing Singaporeans. Among other things, it pledged to:

Strengthen the Central Provident Fund (CPF) savings scheme.

Explore ways to extend the re-employment age beyond 65.

Increase the number of beds in nursing homes and hospitals.

All three promises are crucial to meet old-age needs.

The ability of the CPF savings scheme to meet retirement needs, many fear, has been compromised, with Singaporeans withdrawing more and more for housing in recent years.

A big worry is that the CPF Life scheme - which allows members to receive monthly payments for life when they retire - is not adjusted for inflation. This needs to be done for the scheme to be an adequate source of retirement income. Now, CPF Life payouts for workers who retire from low-income jobs can be less than $350 per month, well below the subsistence-level public assistance rates.

So it is not surprising that only around one in 10 older Singaporeans opted into the scheme, according to figures released by Manpower Minister Tan Chuan-Jin in March.

Since last year, members have been automatically included in CPF Life if they have at least $40,000 in their Retirement Account when they turn 55 or $60,000 when they turn 65.

As birth rates dive and families shrink, fiscal prudence demands that older workers remain in the workforce for as long as possible. The Retirement and Re-employment Act, passed in 2011, makes it compulsory for firms to re-hire older workers who are healthy and have a satisfactory work performance from age 62 to 65.

The first batch of Singaporeans re-hired at age 62 in 2011 turns 65 this year. Many among them are keen to continue working.

Given the tight labour market, they are likely to be re-hired but moving forward, the right of a healthy worker to be re-hired beyond 65 must be enshrined in law. Close attention must also be paid to re-hiring terms and conditions.

The law allows employers to cut up to 10 per cent of workers' pay when they turn 60 even if they remain in the same jobs. Manpower Ministry studies of private sector firms in 2011 showed around two in three re-hired workers did not get pay cuts. This number must be tracked regularly and not be allowed to grow.

In fact, as more older workers join the workforce, the legal sanction for firms to cut workers' pay when they turn 60 despite doing the same job should be removed.

Acknowledging eldercare concerns, the addenda to the President's Address also unveiled plans to add 11,000 hospital and nursing home beds.

But with many studies highlighting the benefits of allowing people to age at home rather than in institutions, there is also an urgent need to build up home care and community care options. There are around 3,000 places at day-care centres for the elderly islandwide, which seems frightfully low, given that there are already close to 260,000 people here aged 70 and above.

But as systems to enable older folk to live, work, retire and be cared for are strengthened, there is also a need for families, businesses, charities and volunteers to each play a part to ensure that Singapore's pioneers get the peace of mind they so richly deserve in the last leg of their lives.

Ageing is both a challenge and an opportunity. And no Government can meet its myriad demands alone.

Government urged to review CPF holistically

By Ng Jing Yng, TODAY, 21 May 2014

Beyond gradually raising contribution rates, the Government would need to re-examine the Central Provident Fund (CPF) system holistically as it seeks to ensure Singaporeans have enough for their financial needs in their golden years, observers and Members of Parliament have said.

Among their suggestions are increasing the interest rates for the Ordinary Account (OA) and Retirement Account (RA), lowering the withdrawal limits for buying property and relooking the allocation between the OA, the RA and the Medisave Account.

Yesterday, the Ministry of Manpower (MOM) said it would continue to review and improve the CPF system in consultation with the labour movement and employers, “so Singaporeans can retire with peace of mind, while taking into account the cost implication to employers”.

The MOM was responding to President Tony Tan’s address last Friday at the reopening of the 12th Parliament, when he said the Government would improve the CPF savings and annuity schemes, and develop more options for elderly Singaporeans to monetise their homes. The ministry, however, did not provide details of its review.

To boost older Singaporeans’ financial capability in retirement and improve healthcare affordability, it was announced during the Budget in February that CPF contribution rates for older workers would be increased next year. Amid concerns from employers about higher business costs and that older workers could be less attractive to hire, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said the Government did not expect to make further changes soon to total CPF contribution rates.

Members of Parliament (MPs) who spoke to TODAY reiterated that continuously increasing the contribution rates was unsustainable.

Ang Mo Kio GRC MP Inderjit Singh suggested that, in tandem with more affordable housing, the CPF Board could allow Singaporeans to use less money from their OA to buy a property. “If we use less for housing, we will have more for retirement. We start earning 4 per cent (interest rate) earlier,” said Mr Singh, who also suggested raising the interest rates, which currently stand at 2.5 per cent per annum for the OA and 4 per cent for the RA.

Money in the OA can be used to repay housing and education loans, for instance. The RA is to cater to a CPF member’s retirement needs.

Currently, CPF monies are invested in bonds that are issued and guaranteed by the Government. Chua Chu Kang GRC MP Zaqy Mohamad proposed an investment-linked plan managed by the CPF Board to pool together investments from different members and provide higher returns.

The Government stated previously on several occasions that higher returns would entail greater risks.

Still, Mr Zaqy noted: “What Singaporeans are looking for are higher returns but, at the same time, they know there is someone trusted like the CPF watching their backs.”

Agreeing with the plan to create more ways for the elderly to unlock the value of their homes, Mr Zaqy also called for greater flexibility in the Minimum Sum scheme, which requires Singaporeans to set aside a certain sum in their CPF, so they can receive monthly payouts when they reach the draw-down age. The Minimum Sum has been increased over time to account for inflation.

National Trades Union Congress deputy secretary-general Heng Chee How reiterated that raising CPF contribution rates is only one way to enhance savings.

Offering a slew of suggestions, Mr Heng, who is also MP for Whampoa, said the CPF wage ceiling could be reviewed periodically to help those earning above the ceiling to save more in their CPF accounts. The allocation to the sub-accounts — the proportions vary as one ages — could also be tweaked and payout rates from the CPF LIFE annuity scheme could be increased, among other things, he said.

Citing the plight of workers who have low disposable incomes, unionists said employers should bear higher CPF contribution rates.

Noting that the contribution rates of employers are currently lower than those of the vast majority of workers, Amalgamated Union of Public Employees deputy general secretary Yeo Chun Fing said the first step might be to level up employers’ contribution rates.

A paper by National University of Singapore economists in 2012 showed that the CPF system would be able to provide adequately for retirement “with prudent choice of housing and the wise use of withdrawn CPF savings”.

CIMB economist Song Seng Wun felt it was inevitable that contribution rates — from both employers and employees — would have to increase over time to ensure retirement adequacy, however unpalatable that might be.

“The profile of the population is ageing … healthcare costs are certainly going to rise. From a demographic standpoint, it seems inevitable in terms of planning for the future,” he said.

While the CPF system could theoretically be made more flexible to consider one’s financial acumen and whether he or she has adequate personal savings, this would be challenging to implement, Mr Song added.

He said: “It is never going to be easy when you act on behalf of your citizens ... From a citizen’s standpoint, why are you so controlling over every aspect of my life?”

Related
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Addenda To President’s Address: Caring Society
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A closer look at CPF
The Truth About Our CPF and the Minimum Sum