Budget 2015 - 'Unwise' to give option of CPF payouts from age 60

Friday, 6 Mar 2015

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'Unwise' to give option of CPF payouts from age 60

Published on Mar 6, 2015 2:17 AM

A WORKERS' Party (WP) proposal to give people the option to get monthly payouts from their CPF savings at age 60 instead of just at the allowed age of 65 "is not a crazy idea, but it would be unwise", Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

In cautioning against the move, he highlighted how countries such as Denmark, Finland and France that took such a path have had to reverse course.

Also, its negative consequences would be suffered by both the individual and society.

Said Mr Tharman, who is also the Finance Minister: "Everywhere it has been tried, the result has been that those who take up this option of early payouts end up less prepared for retirement.

"Less prepared because they stopped work earlier, and less prepared because they will have lower payouts through the rest of their lives.

"The upshot of it... is the rest of society eventually has to take on larger responsibility to support them."

WP Members of Parliament Png Eng Huat (Hougang), Chen Show Mao, Muhamad Faisal (both of Aljunied GRC) and Non-Constituency MP Gerald Giam had earlier called for the lower-age option to give greater flexibility to CPF members who, for various reasons, are unable to work and need money urgently.

They also want the CPF withdrawal age to be delinked from the retirement age, so it is not the "moving target" that it is now.

But, Mr Tharman said, experts had taken a dim view of countries such as Britain, which had allowed retirees to take out their retirement savings early.

"The reasons are the same all over the world: It is good to offer choice, but part of the human predicament all over the world is that we will all place greater priority on what happens today and the benefits we can get today rather than what we get well into the future," he said.

People also underestimate how long they will live, he added. As a result, some Nordic countries now link their pension and retirement ages to life expectancy.

"We should recognise these challenges honestly and not take positions for their populist appeal, when we know fully that putting such proposals into practice will merely set us back in tackling the larger challenge of ensuring adequate retirement income throughout the retirement years," he said.

LIM YAN LIANG