CPF retirement planning pilot to start in July 2015

After three-month trial, service to extend to 6,500 individuals turning 55 this year
By Matthias Tay, TODAY, 18 Mar 2015

With three children and a career as a retail manager, retirement planning was the last thing on Ms Aisah Bakri’s mind.

But a one-on-one retirement planning session by the Central Provident Fund (CPF) Board — part of a trial for a fully fledged programme to be rolled out early next year — was a “wake-up call” for Ms Aisah, who turns 55 in November.

While she had previously not given the issue much thought, receiving the invitation to take part in the trial got her thinking about her financial status, said Ms Aisah. She went for the session hoping to find out more about how to manage the investments she had made using her CPF monies, as well as why only S$5,000 can be withdrawn unconditionally from her account when she turns 55.

“I think that this is one of the ways you can make people understand (better) ... The technical terms (explaining CPF matters) can be long and wordy. Getting someone to explain to you is easier than reading from the Internet or papers,” said Ms Aisah.

Plans to introduce a retirement planning service for Singaporeans were announced during the Ministry of Manpower’s Committee of Supply debate last week. The three-month trial was conducted with 50 participants who were turning 55 this year. A pilot will be launched in July to reach out to an estimated 6,500 individuals in the same age group.

The scheme is aimed at this group because 55 is the age when CPF members will see the creation of Retirement Accounts, said CPF Retirement Management Office senior manager Dorcas Fong.

“Because at age 55, we transfer (funds) from Ordinary Account (OA) and Special Account savings to create the Retirement Account. This reduces the Ordinary Account savings available for payable obligations such as the housing loan,” said Ms Fong.

The decrease in the OA accounts often shocks people, she said, noting those who took part in the trial were generally ignorant of the implications of the creation of the Retirement Account on their financial obligations.

Having one-on-one exchanges with a consultant makes it easier for CPF members to understand the CPF mechanism, compared to trawling the Internet for information. “With a person, you can ask any question. You don’t have to spend the effort to click here and there, Google around and pour through all the things ... You also feel trustworthy as there is a person you can latch on to,” said Ms Fong.

The duration of each consultation session depends on a client’s questions, and can range from 30 to 45 minutes.

CPF consultants prepare for the session by collating the members’ CPF information. The consultants then help them understand the impact of their decisions better through projected figures. For example, members who wish to withdraw their CPF monies if they meet the Minimum Sum will be presented with two sets of projections: The projected monthly payout they would receive at age 65 if they were to keep all their money intact, and another payout figure should they choose to keep only the Minimum Sum, which is set to be replaced by the Full Retirement Sum.

“This allows them to consider the implications of their actions and decide for themselves,” said Ms Fong.

Ms Aisah said from the session, she found that the amount of money in her CPF accounts, together with her investments, would help her meet the current Minimum Sum. This has spurred her to contact her financial adviser to find out more about the investments she had made over the past 20 years. “I am more knowledgeable and now see the need to think about it (retirement) more seriously,” she said.







Related
CPF Advisory Panel Recommendations
Singapore Budget 2015 : CPF Enhancements
Committee of Supply Speeches 2015: CPF Highlights