Toh Yong Chuan
The Straits Times
Thursday, May 29, 2014
SINGAPORE - Two Members of Parliament want the Government to take the lead in helping Singaporeans to earn higher returns on their Central Provident Fund (CPF) savings.
The call was made by Mr Zaqy Mohamad (Chua Chu Kang GRC) and Nominated MP Tan Su Shan, who is a senior bank executive.
Mr Zaqy has proposed that the Government initiate and lead an investment plan that will offer higher interest rates and take into account inflation.
He made the call in a wide-ranging speech which kicked off the debate yesterday, thanking President Tony Tan Keng Yam for his address on the Government's directions in the second half of its term.
Mr Zaqy called for better communication of public policies and retirement adequacy, among other things. By improving returns on CPF savings, the Government can reduce unhappiness with the "changing goal posts" of the minimum sum, he said, referring to the increases in the minimum sum requirement to meet longer lifespans and rising costs.
The CPF system has recently come under fire online, as the minimum sum is set to increase from $148,000 to $155,000 from July 1. It is set to go up again in July next year but the amount has not been determined.
The criticism prompted Manpower Minister Tan Chuan-Jin to defend the national pension fund in a blog post on Sunday.
In her speech, NMP Tan suggested having regular savings plans that are tied to bonds or fixed-income unit trusts that pay regular dividends.
Such a "diversified pool of higher interest-bearing instruments" will ensure that inflation does not erode the value of CPF savings which are not invested, Ms Tan said.
"Some of these instruments are already available but due to the lack of knowledge, many Singaporeans have not availed themselves of these savings instruments," she added.
The interest rates are 2.5 per cent per annum for CPF Ordinary Account savings, and 4 per cent per annum for the Special, Medisave and Retirement accounts.
An extra 1 percentage point is paid on the first $60,000 of a CPF member's combined balances.
But Singapore's inflation rate has averaged 4.1 per cent over the last three years, Ms Tan noted.
She has previously urged the Government to issue inflation-linked bonds, but she noted: "We can't seem to do this."
Two other MPs also spoke about the CPF system.
Non-Constituency MP Lina Chiam suggested alternative investment options such as non-compulsory CPF and private annuity schemes.
Mr Liang Eng Hwa (Holland-Bukit Timah GRC) said that the CPF was a "major pillar" in the Singapore system, and has ensured "retirement adequacy while making funds available in important areas such as home ownership, health care and education".
The Straits Times
Thursday, May 29, 2014
SINGAPORE - Two Members of Parliament want the Government to take the lead in helping Singaporeans to earn higher returns on their Central Provident Fund (CPF) savings.
The call was made by Mr Zaqy Mohamad (Chua Chu Kang GRC) and Nominated MP Tan Su Shan, who is a senior bank executive.
Mr Zaqy has proposed that the Government initiate and lead an investment plan that will offer higher interest rates and take into account inflation.
He made the call in a wide-ranging speech which kicked off the debate yesterday, thanking President Tony Tan Keng Yam for his address on the Government's directions in the second half of its term.
Mr Zaqy called for better communication of public policies and retirement adequacy, among other things. By improving returns on CPF savings, the Government can reduce unhappiness with the "changing goal posts" of the minimum sum, he said, referring to the increases in the minimum sum requirement to meet longer lifespans and rising costs.
The CPF system has recently come under fire online, as the minimum sum is set to increase from $148,000 to $155,000 from July 1. It is set to go up again in July next year but the amount has not been determined.
The criticism prompted Manpower Minister Tan Chuan-Jin to defend the national pension fund in a blog post on Sunday.
In her speech, NMP Tan suggested having regular savings plans that are tied to bonds or fixed-income unit trusts that pay regular dividends.
Such a "diversified pool of higher interest-bearing instruments" will ensure that inflation does not erode the value of CPF savings which are not invested, Ms Tan said.
"Some of these instruments are already available but due to the lack of knowledge, many Singaporeans have not availed themselves of these savings instruments," she added.
The interest rates are 2.5 per cent per annum for CPF Ordinary Account savings, and 4 per cent per annum for the Special, Medisave and Retirement accounts.
An extra 1 percentage point is paid on the first $60,000 of a CPF member's combined balances.
But Singapore's inflation rate has averaged 4.1 per cent over the last three years, Ms Tan noted.
She has previously urged the Government to issue inflation-linked bonds, but she noted: "We can't seem to do this."
Two other MPs also spoke about the CPF system.
Non-Constituency MP Lina Chiam suggested alternative investment options such as non-compulsory CPF and private annuity schemes.
Mr Liang Eng Hwa (Holland-Bukit Timah GRC) said that the CPF was a "major pillar" in the Singapore system, and has ensured "retirement adequacy while making funds available in important areas such as home ownership, health care and education".
