Friday, March 6, 2015

CPF Minimum Sum – Making it Meaningful

As had been pointed out before, the issue with CPF is not the increasing CPF Minimum Sum, it is inadequate retirement savings.

The CPF Minimum Sum is an estimation of the amount an average person would need to meet basic needs after retirement.  This amount is revised regularly to take into account inflation, and maybe changes to life expectancy as well.  All very sound.

But we can do better.

Instead of just being the amount that the Government will not allow you to withdraw out of your CPF account at age 55, it should be the amount that the Government will top up to, for CPF members who fall short.  Only then will it be truly meaningful.

With power comes responsibility.  Or it should.

The Government is given powers in order for it to carry out its responsibilities.  Those of improving the lives of the people; of ensuring equal opportunities regardless of background, wealth or any other personal factors; of righting wrongs; of moderating market excesses, inefficiencies and downright failures via regulations; and of income redistribution, amongst others.

In the same manner, in return for implementing a compulsory saving scheme where control of the funds lies in the hands of the government rather than the individual, it must be accompanied with the responsibility to ensure a retirement with dignity for those who put in a reasonable effort to provide for himself and his family throughout his working life.  Power and responsibility must come together in a package.

A scheme that seeks only to control but gives nothing back earns you compliance at best, and resentment at worst, never respect.

Singaporeans are not unreasonable.  We do not expect the Government to commit itself to amounts it cannot afford or that is unsustainable over the longer run.  But let the fundamentals be set right to reflect our values and our commitment to each other, as fellow Singaporeans, as a nation.  We can adjust numbers when circumstances change, but we cannot adjust trust, respect and bond as quickly.