Today the NTUC made some suggestions to the CPF Advisory Panel which has been tasked to recommend CPF changes to the Government. In short, here are the suggestions by the NTUC:
If you’re asking me what this means, it means that the Labour Movement is helping Singaporeans i.e. workers to better meet the retirement needs through savings in their CPF accounts.
According to the NTUC, it engaged 250 union leaders, rank-and-file workers, freelancers and self-employed, youths, active-agers, low-wage workers as well as Professionals, Managers and Executives (PMEs) through focus group discussions to understand their concerns and feedback.
Some of the suggestions are nothing new; in fact they have been on NTUC’s wishlist for the past few years. But four suggestions for this year have caught my attention:
- Having more support for Freelancers and Self-employed
- Encouraging Voluntary Top-up
- Greater transparency and predictability of the Minimum Sum
- Flexibility with Lump Sum withdrawal
Support for Freelancers and Self-employed
Self-employed who make the relevant contributions to their Medisave Accounts also receive Workfare Income Supplement (WIS) payouts in cash and to their Medisave Accounts. NTUC has suggested that the Government provide WIS top-ups to the Special Accounts of the self-employed if they make contributions to their Special Accounts. This will help these individuals to build up their CPF Special Accounts and be retirement ready.
It also urged the Government to provide incentives to encourage service buyers and principals to contribute to the CPF savings of self-employed and freelancers, which will also help to build up their savings for retirement.
Another important role in retirement adequacy is the support of family members. This is especially so for those who have been economically-inactive and do not have sufficient CPF savings for retirement. CPF members can receive additional tax relief if they help to top-up their family member’s’ CPF accounts.
Hence, NTUC has suggested that to encourage more CPF members to help their family memebrs achieve financially secure retirement, additional tax relief be computed based on number of family members receiving top-ups; and raise the income ceiling of receiving spouse or siblings from the current $4,000 to $12,000 per annum.
Greater transparency and predictability of the Minimum Sum
To ensure greater certainty and predictability, NTUC also urged the Government to set a 10-year Minimum Sum Schedule with corresponding CPF Life monthly payout. It also recommended a mis-term review of the schedule to ensure predictability.
And in order to be transparent, the NTUC also suggested that any adjustments or changes to be explained to members adequately in advance.
Flexibility with Lump Sum Withdrawal
NTUC welcomes the allowing of workers to use part of their CPF savings for large expenditure as announced at last year’s National Day Rally by Prime Minister Lee Hsien Loong. It recommended that a percentage withdrawal of the Retirement Account balance, even for those who do not meet the Minimum Sum. To help CPF members understand the impact of withdrawing the Lum Sum and the trade-off between the Lump Sum withdrawal and CPF Life monthly payout, financial counselling was recommended to be provided to all CPF members.
Another recommendation which the NTUC made was for the Government to provide a one-time “Non-Withdrawal” incentive, substantial enough to incentivise members from making the Lump Sum withdrawal. This will help to keep the total amount in their Retirement Accounts intact.
For me, the common thread that runs through all these recommendations is the good it brings Singapore’s workers. Even if our workers retire in future, the recommendations to the CPF changes also go towards taking care of CPF members’ retirement needs.
The recommendations can be seen as enhancing the CPF system which many Singaporeans hold dear to. NTUC Assistant Secretary-General Cham Hui Fong said that the ultimate aim of the recommendations is that the CPF Advisory Panel can have a holistic review of the CPF scheme.
“Essentially we hope to continue to help boost the CPF savings of the CPF members,” said Ms Cham.
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