CPF is a robust and sustainable system: Tharman

By Walter Sim, The Sunday Times, 22 Jun 2014

Deputy Prime Minister Tharman Shanmugaratnam defended the Central Provident Fund (CPF) yesterday, saying it is recognised internationally as a robust and sustainable system.

"We've provided a guarantee and a very fair rate of return that is not easy to beat in the market," said Mr Tharman, who is also Finance Minister. "The difference in our case is that we take risk away from the ordinary citizen.

"If you're wealthy, you're well-off and you know how to manage a large amount of finances, then that's a different matter.

"But experience has shown in the United States, Europe and United Kingdom that for most people, it's not wise to put too much investment risk on them."

Following recent calls for more transparency about the CPF system, he said that it currently provides "very significant flexibility".

Members can use funds to pay off housing loans, while in retirement it provides MediShield cover. "Not everyone realises that the Minimum Sum is not $155,000 but it's half of that if you use your housing pledge," he said.

"Significant amounts of money can in fact be taken out to be used, to be saved as you wish or to be used to meet immediate means."

He further explained that the CPF Board invests entirely in Singapore government securities, of which the interest rate is known.

The Government then takes on the risk itself through investments, mainly in the Government of Singapore Investment Corporation (GIC), as well as in the Monetary Authority of Singapore.

Even with the GIC publishing its returns, Mr Tharman said: "It doesn't affect the CPF member because he or she is assured of a fair rate of return with no risk."

This, he said, is unique among social security systems around the world. He cited pensioners elsewhere who have had their retirement savings wiped out because of the global financial crisis.

Mr Tharman said the Government is still working on strengthening the system, without providing further details.

The Finance Minister also acknowledged several challenges faced by the CPF system in meeting inflation and basic retirement needs. "These will change over time, because today's generation of retirees has more needs and would like to have a different life in retirement compared to even 20 years ago. That's natural with progress."

Prime Minister Lee Hsien Loong is expected to talk about CPF at the upcoming National Day Rally.

Mr Tharman - who is also an MP for Jurong GRC - was speaking at the fourth annual Jurong Lake Run last night, which drew 16,000 participants ranging from babies in strollers to 84-year-olds and raised $150,000 for five beneficiaries.

Last week, it was announced that Jurong Lake District will be a test bed for a "smart nation". Later this year, 15 innovations - such as automatically adjusting light timings to ease the gridlock for motorists - will be tested there.

Mr Tharman said it is an ideal model of how heritage - such as the Chinese and Japanese gardens - can be preserved alongside innovation.

He said: "An important part of the future is how we can use technology to make everyday living better... It's a whole range of possibilities."

CPF money 100% safe: Swee Say
By Audrey Tan, The Straits Times, 23 Jun 2014

MINISTER in the Prime Minister's Office Lim Swee Say yesterday assured Singaporeans that their money in the Central Provident Fund (CPF) was "100 per cent safe".

While many investments had been lost during the global financial crisis, he pointed out, CPF had still continued to earn interest then.

"(The) money with CPF... was not only safe, but continued to earn risk-free interest," he told reporters on the sidelines of a mock parliamentary debate session for students at The Arts House.

He was responding to recent public discussions on the CPF, prompted by a May 15 post by blogger Roy Ngerng alleging that Prime Minister Lee Hsien Loong had misappropriated CPF savings.

Mr Ngerng has since been sued by Mr Lee for defamation.

Yesterday, Mr Lim reminded Singaporeans that the money in their CPF account was theirs - something that "nobody can take away".

He said: "You have the money, the account, and you receive the statement of accounts on a regular basis, so you know exactly how much money you have."

Mr Lim, who is also labour chief, emphasised that the CPF is used mainly for retirement, after accounting for housing, health care and education for children.

Considering how Singaporeans are living longer, he advised against the early use of CPF money, as this would leave less for retirement.

"Instead of thinking if you can spend your savings at the age of 55, we should think about how we can help Singaporeans remain employed, earn a good living and, at the same time, to continue to contribute to the CPF," he said.

The three-day Singapore Model Parliament event, which involved more than 100 students, ended yesterday.

Discussions were dominated by several national issues, such as Singapore's Constitution, minimum wage and cyber security, with the students taking on parliamentary roles including that of prime minister, ruling party MPs and opposition party MPs.

The event was organised by government feedback arm REACH's Youth Ambassadors from the National University of Singapore (NUS), the NUS Political Science Society and the Pro Bono Office of the NUS Faculty of Law.

Said NUS law student Navin Prakass Pillay, 23, who was one of the organisers: "I encountered participants who are very passionate about issues that young people are not really interested in... I found that very refreshing."

Put CPF concerns to bed with good communication
By Nur Asyiqin Mohamad Salleh, The Sunday Times, 22 Jun 2014

Barely a year out of university, with next to no Central Provident Fund (CPF) savings to my name and a hefty education loan on my back, thoughts of retirement have been the furthest thing from my mind. Until recently.

That is because whether online, in Parliament or at home, CPF has become the talk of the town.

Interest in the savings scheme has scaled new heights, and with the line between fact and fiction sometimes blurred, there is a need for the Government to speak with more clarity and detail to put concerns to bed.

Last weekend, a residents' dialogue by People's Action Party MP Hri Kumar Nair drew people from outside his ward - including Reform Party chief Kenneth Jeyaretnam.

I thought I came to the CPF party late, weighed down by confusion - how much can I withdraw at 55? Wait, what can I do with my Special Account again? But after Mr Nair's dialogue, I realised that many are unclear about how the scheme works - including retirees the CPF is meant to serve.

No longer the simple retirement savings scheme it was in the 1950s, the CPF has swelled with added responsibilities: the Public Housing Scheme in 1968, which allowed people to use their CPF funds to buy public housing; the Residential Properties Scheme in 1981 to let people pay for private homes with their CPF; the Medisave scheme that allows people to use CPF savings for health care.

The details may all be available from the CPF Board, but it is plain that many CPF members are in the dark about how it all works, what happens to their money and why they have to wait to get their own savings.

The Government is being depicted as tight-lipped on the scheme, holding off on revealing in detail its inner workings.

One senior citizen I spoke to recently said suspiciously, arms windmilling, bag stuffed with printouts on the scheme: "Why can't they tell us clearly how our money is managed?"

Another, a 65-year-old retiree, had no idea about the reasons for a Minimum Sum Scheme or why it works the way it does - with some savings set aside at age 55, to be returned as monthly payouts from age 65.

Complaining that he could not take out all his savings at age 55, he said: "It's like they let you taste a bit of your money. Then they lock the rest away. I'm not happy."

Why isn't a CPF member like him clear about why his money is managed this way, or why it may be in his best interests?

These are questions and concerns the Government should meet head-on. Letting them slide by allows a revolving cast of people to mouth off with a variety of analyses, guesses and wild allegations. It is what has allowed someone like blogger Roy Ngerng - now being sued for defamation after alleging Prime Minister Lee Hsien Loong had misappropriated CPF funds - to become for some the face of CPF frustration.

And with the case going to court, the CPF will have to weather the glare of public scrutiny in the coming months.

What then can be done to soothe these concerns?

I believe good communication can be a balm for this unhappiness.

Chua Chu Kang GRC MP Zaqy Mohamad said in Parliament that gaps in information help the spread of conspiracy theories.

The Government needs to better explain policy benefits and issues on the ground, he said, lest destructive politics - "especially the politics of envy, and the politics of self-interest" - arise.

And as the CPF takes centre stage, explanations have indeed been clearer, more open and more frequent.

Last month, Manpower Minister Tan Chuan-Jin took to his blog to clear up some myths about the CPF.

An explanation by the Ministry of Finance - one of its most detailed so far - on how CPF monies are invested was put up on The Straits Times political site Singapolitics and widely shared.

With genuine concerns over the CPF, the Government should take a hard look at the scheme to address concerns and insecurities people have so strongly given voice to.

And indeed, PM Lee has promised improvements to the CPF and CPF Life annuity scheme by the National Day Rally in August.

But that may count for nought unless the changes are also accompanied by communication that is clear and plain, and efforts to keep the scheme as user-friendly as possible.

Related

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