Singapore CPF Life: Make sure ‘birthday boys’ don’t miss the party
By Li Xueying
IMAGINE spending weeks planning the perfect surprise birthday party - but the birthday boy does not show up.
This is how Mr Zainudin Nordin (Bishan-Toa Payoh GRC) described a possible pitfall of the new national annuities scheme, CPF Life.
He and fellow MP Amy Khor (Hong Kah GRC) yesterday identified low-wage casual workers and housewives as two groups who need the scheme the most - and yet may not come on board.
The reason: insufficient money in their Central Provident Fund (CPF) Minimum Sum balances.
Both MPs, at the outset, applauded the annuities scheme, which gives a lifelong monthly income to Singaporeans in return for premiums paid from their Minimum Sum.
Said Mr Zainudin: ‘I believe the CPF Life scheme will give you peace of mind, and that is priceless.’
THE BEST BET
‘So is it better to spend 30 minutes standing in a 4-D queue for a very small chance of winning something? or 30 minutes queuing in a CPF branch for a 100 per cent certainty of getting $4,000?’
MR ZAINUDIN NORDIN, an MP for Bishan-Toa Payoh GRC, on how early adopters of the CPF Life scheme can get up to $4,000 in bonus top-ups from the Government in their CPF accounts.
However, the CPF Board ‘can do more’, he added.
The compulsory scheme, which starts in 2013, exempts those with a Minimum Sum of less than $40,000.
This would include more than 100,000 casual, self-employed and contract workers who have no or little CPF money. A Life Bonus, given to older and lower-wage workers, may encourage them to opt in.
But Finance Minister Tharman Shanmugaratnam, in his Budget Statement, had said they must first make a ‘reasonable contribution’ to their Minimum Sum account and accept lower monthly payouts.
Said Dr Khor yesterday: ‘If this amount is deemed too onerous, it would be difficult to get this group on board, and it is precisely this group that are most likely to need the CPF Life for their old age.’
Added Mr Zainudin: ‘Some of them may decide to do their own top-up but only if they have the means to dig deeper into an already very shallow pocket.
‘Still, they are luckier than others such as cleaners, shop assistants and house help, who will never be able to accumulate the eligibility sum using their own earnings.
‘I therefore appeal to (CPF Board) to give these workers proper advice on how to plan for their sunset years.’
One group, meanwhile, is getting some help.
Taxi operator ComfortDelGro is passing on the savings from the reduction in road tax to their 15,000 hirers who have CPF. Some $2.7 million - about $180 each - will be paid into their CPF accounts, boosting their Minimum Sum.
In highlighting the plight of housewives, Dr Khor said a new tax relief of up to $7,000 could encourage a husband to contribute to his wife’s Minimum Sum account.
Such contributions are crucial as one in three women mid-lifers has never worked. Also, women live longer than men.
Both MPs stressed the need to avoid what happened with the Workfare Income Supplement, where only 9,000 out of 112,000 people who qualify have signed up.
Using the birthday party analogy, Mr Zainudin said: ‘Why? Because you forgot to send out his invitation card. Or maybe you did send it to him but in a language he couldn’t understand.’
Thus, the importance of a relevant outreach campaign.
Using say, newspapers and TV may not be effective. The use of dialects over radio may be more direct, he suggested.
Ensure that the CPF hotline is manned by staff able to counsel the elderly on their annuity plans, added Dr Khor. ‘As the scheme is a complex one…the Government would have to spare no expense in embarking on an appropriate educational campaign.’
But Mr Seng Han Thong (Yio Chu Kang), a member of the committee that drafted the scheme, said its underlying principle is simple: No matter what package you choose, it’s life-long.
Source : Straits Times - 26 Feb 2008
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