Friday 12 September 2014

CPF Panel set up to study four key areas

It will look at making system more flexible, to meet needs of more people
By Rachel Au-yong And Janice Heng, The Straits Times, 11 Sep 2014

A 13-MEMBER advisory panel has been set up by the Ministry of Manpower (MOM) to study possible improvements to the Central Provident Fund (CPF).

Led by National University of Singapore president Tan Chorh Chuan, it was first mentioned at Prime Minister Lee Hsien Loong's National Day Rally last month.

It includes members from academia, the financial sector and community organisations, to present a broad spectrum of views, the MOM said yesterday.

"The Government has been studying further enhancements to some key aspects of the CPF system to make it more flexible to meet the needs of more Singaporeans and provide additional options in retirement," it said.

* CPF Advisory Panel's Recommendations

The panel will study four main areas. One is how the Minimum Sum should be adjusted beyond next year so members can receive monthly retirement payouts for life. The Minimum Sum is now $155,000 but will rise to $161,000 for those turning 55 next July.

After that, there will be no more major increases in the required amount, said PM Lee, although the sum will have to be raised from time to time.

A second area is how to enable bigger lump-sum withdrawals upon retirement. The circumstances for doing so will also be looked at while taking into account whether different groups would have enough to tide over retirement.

The panel will also study how to give an option to those who want lower payouts first and then have the payouts rise with time given cost increases.

It will also consider how to provide more flexibility for those who want higher returns through private investment plans while balancing the higher investment risks involved, as well as for those who want to invest in private annuities as an alternative to the CPF Life annuity plan.

The panel's scope was applauded by Singapore Management University economist Hoon Hian Teck. "I thought they are quite bold to address the key issues that have cropped up in the last several months," he said, citing demands such as higher returns.

Retirement adequacy has been the focus in recent months, with the CPF scheme coming under much debate, and the new MediShield Life being introduced.

One of the panellists, Mr Christopher Tan, chief executive officer of financial advisory firm Providend, is keen to use his area of expertise when the panel convenes for the first time later this month.

"The CPF is the cornerstone of retirement planning in Singapore - it's a government scheme you have to learn to make use of." He would like to discuss how the CPF Board or Government could provide counselling services for private pension plans to the layman.

Fellow panellist Tan Bee Wan, executive chairman of consulting firm Integrative Learning Corporation, said that while the panel will deal primarily with financial aspects, retirement is more than that.

"It's not about the quantitative value, but ageing with peace of mind. Money is a small part of the equation. The rest is how you are going to spend your money, who you are going to spend it with, and what is of value to you."

The panel can inform people only about their choices, not make them, she added.

Bishan-Toa Payoh GRC MP Zainudin Nordin, chairman of the Government Parliamentary Committee for Manpower, said it has its work cut out as there are demands to be balanced. "I am confident they will come up with as many good ideas as possible."

The panel will give its recommendations next year. A full report is expected a year from now. The public can e-mail their views to

The 4 main areas
- What adjustments to the Minimum Sum beyond 2015
- How to enable lump-sum withdrawals
- An option for CPF payouts that rise with living costs for those wanting it
- Flexibility to choose higher returns through private investment plans; or alternative annuity plans

Minimum Sum among 4 key areas CPF panel to study
Observers ask if scope is too narrow as it does not cover retirement adequacy
By Neo Chai Chin, TODAY, 11 Sep 2014

The 13 members tasked with studying issues related to the Central Provident Fund (CPF), outlined by Prime Minister Lee Hsien Loong during the National Day Rally, had their scope of work defined yesterday.

But some observers have questioned if their area of study is too narrow, with the task of examining retirement adequacy provided by CPF funds not within the advisory panel’s terms of reference.

The Ministry of Manpower (MOM) yesterday laid out the four areas the panel would study: How the CPF Minimum Sum should be adjusted beyond next year to meet the objective of delivering a basic monthly retirement payout for life, how to enable CPF members to withdraw more as a lump sum upon retirement and the circumstances for doing so, how to allow CPF members to receive lower payouts initially with increases in time, as well as how to provide more flexibility for those who wish to take on higher risks and seek higher returns through private investment plans and who wish to invest in private annuities instead of CPF LIFE.

The panel will be headed by Professor Tan Chorh Chuan, president of the National University of Singapore. Its members include financial and actuarial experts, as well as community leaders and those engaged in issues faced by women and the elderly. They are expected to complete their study within a year and will provide initial recommendations by early next year.

Two economists approached by TODAY felt the areas of study defined for the panel were narrow. The terms of reference could have been broader to consider if changes should be made to the current official withdrawal age of 55, for instance, said Lee Kuan Yew School of Public Policy economist Hui Weng Tat. They could also have covered changes in the CPF system that would ensure retirement adequacy for the large majority of CPF members.

Within the scope of the terms of reference, Associate Professor Hui said the Minimum Sum’s objective to deliver a basic monthly payout for life should ideally mean lifelong payouts that are inflation-indexed. This would involve the provision of special inflation-indexed bonds by the Government for CPF LIFE funds, he added.

He also suggested that greater flexibility could be given to CPF members who have more than the Minimum Sum to place their extra retirement savings in CPF LIFE to receive higher payouts.

NUS economics lecturer Chan Kok Hoe said the CPF’s adequacy as a retirement vehicle depends mainly on two factors: How much funds people are able to accumulate for retirement and what returns they can obtain relative to inflation.

The terms of reference do not include looking into the first factor, which would involve the allocation of funds between housing and retirement as well as overall CPF contribution rates, he said. On the second factor, the panel is tasked to study how to adjust CPF payouts to increase nominally over time, but not to examine whether CPF funds should be invested in special inflation-indexed government securities, he said.

But Ang Mo Kio Member of Parliament Inderjit Singh felt the terms of reference enable the panel to cover “quite a bit of ground”. Its scope of work cannot be so broad that the study would take a long time, but cannot be “so narrow that you’re guiding them and fail to look at something that may be beyond what we currently know”, he said. He added that the CPF system is a sound one that needs fine-tuning, but not an overhaul.

Asked if the panel could touch on areas such as CPF interest rates, the MOM said: “The panel’s key task is to study possible enhancements stated in the terms of reference and provide its recommendations.”

Commenting on his appointment as chairman of the panel yesterday, Prof Tan said his team had been assigned an important responsibility. “We recognise that CPF members have varied needs and we hope the panel’s work will provide useful insights to help the Government make further improvements to the CPF system to provide greater peace of mind and more options in retirement,” he said.

Panel members whose affiliations would ostensibly give voice to the concerns of women and the elderly include NTUC Women’s Development Secretariat director Sylvia Choo, Singapore Council of Women’s Organisations president Malathi Das and executive chairman Dr Tan Bee Wan of Integrative Learning Corporation and ACE (Active, Contributive and Engaged) Seniors. Ms Das, a lawyer, said she hopes the needs of ageing women and broken families could be considered when the panel looks into the issue of “enhancing post-retirement independence, which is what CPF is striving for”.

New CPF panel 'to reflect diverse views'
Members span broad spectrum, include experts, grassroots representatives
By Janice Heng And Rachel Au-Yong, The Straits Times, 11 Sep 2014

THE varied composition of the new Central Provident Fund (CPF) Advisory Panel should help it reflect diverse views, including those of different groups on the ground, panel members and observers said.

The 13-member panel, appointed yesterday, includes academics and financial industry experts.

It also has representatives from unions, the grassroots and the social sector, who can convey the views of ordinary Singaporeans.

"I've come across many people with a lot of feedback, and more so in the last few months," said panel member Ng Cher Yan, chairman of the Braddell Heights Citizens Consultative Committee.

One resident, for instance, wanted higher interest on his CPF savings. This topic is related to one of the four areas the panel has been tasked with studying: How to let members seek higher returns through private investment plans.

Prime Minister Lee Hsien Loong first mentioned the panel in his National Day Rally speech last month, saying it would study such "very complicated" potential changes to the CPF system.

Member of Parliament Zainudin Nordin, who chairs the Government Parliamentary Committee for Manpower, welcomed the panel's "good representation across a broad spectrum". He said each member brings "specific know-how and knowledge" from their respective backgrounds.

For panel member Saktiandi Supaat, his background in finance is not the only relevant one.

Besides heading Maybank Singapore's forex research team in global markets, he is active in grassroots organisations and the Association of Muslim Professionals, allowing him to approach CPF issues from a community angle. For instance, some Muslims may want to withdraw CPF savings to go on a haj, or pilgrimage, he said.

Cutting across community lines is the workers' perspective, which National Trades Union Congress Women's Development Secretariat director Sylvia Choo intends to provide.

The labour movement will hold focus groups and dialogues to get workers' views, said Ms Choo.

Women are another group whose concerns will be reflected. Panel member Malathi Das plans to draw on her expertise as a commercial litigation lawyer and her role as president of the Singapore Council of Women's Organisations.

"I hope to be able to bring up some of the issues I have encountered that face ageing women and families who break up and the impact that this has on the family financially," she said.

But beyond representing the views of different groups, the panel should also consider older cohorts separately, said Singapore Management University economist Hoon Hian Teck, who is not a panel member. Those in their 40s and 50s now might have low CPF savings because their salaries grew from a low base. But this is due to historical circumstances, and should not affect the panel's task of how to improve the CPF system for the decades ahead, he said.

Who's on the panel
- Professor Tan Chorh Chuan, president of the National University of Singapore. He will chair the CPF Advisory Panel
- Professor Joseph Cherian, practice professor of finance, NUS Business School
- Ms Sylvia Choo, director of NTUC Women's Development Secretariat
- Ms Malathi Das, president of the Singapore Council of Women's Organisations and a commercial litigation lawyer
- Mrs Hauw Soo Hoon, operating partner at venture capital firm iGlobe Partners
- Professor Benedict Koh, professor of finance (education) and associate dean, Lee Kong Chian School of Business at SMU
- Mr Terry Lee, president of the Singapore Insurance Employees' Union and former Nominated MP
- Mr Muhammad Faizal Othman, vice-chairman of the Taman Jurong Citizens' Consultative Committee, and a financial adviser
- Mr Ng Cher Yan, chairman of the Braddell Heights Citizens' Consultative Committee, and an accountant
- Mr Colin Pakshong, an independent actuarial consultant
- Mr Saktiandi Supaat, head of FX Research, Global Markets, at Maybank
- Dr Tan Bee Wan, executive chairman of Integrative Learning Corporation and social enterprise Ace Seniors
- Mr Christopher Tan, chief executive officer of financial advisory firm Providend

Central Provident Fund (CPF) Advisory Panel
Focus group discussions to gather views on CPF changes
CPF focus group: More to be done to explain CPF to low-wage earners
CPF Advisory Panel to submit first findings by Feb 2015
CPF investments: Too much choice may end badly
NTUC calls for flexibility in CPF withdrawals
CPF Panel: Allow partial lump sum withdrawals and voluntary Minimum Sum top-ups
CPF Advisory Panel's Recommendations, Part 1

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