Jobless at 62, no CPF until 65 or later

The real reason for all these changes is plain to all thinking Singaporeans: The PAP government does not want to have the burden of looking after our old folks if they run out of retirement savings. This, in my opinion, is typical of the PAP’s calculating and heartless style of government.

The writing has been on the wall since 2007, when the government announced plans to introduce re-employment legislation, in tandem with raising the age at which Singaporeans can withdraw the bulk of their CPF savings to 65.

On Tuesday (11 January 2011), the Retirement Age (Amendment) Bill was passed. This Bill (now euphemistically named the Retirement and Re-employment Act) contains some provisions to steer employers in the direction of providing re-employment for their retiring workers, without actually raising the statutory retirement age.

While the law requires employers to offer re-employment to their workers when they reach the retirement age of 62, they are obliged to do so only if the workers fulfil a potentially subjective set of criteria: One, the employee must have at least satisfactory work performance, and two, the employee is medically fit to continue working.

The first criteria is very subjective, particularly if the employer has no proper performance appraisal system. The second criteria does not spell out that employers need to obtain the opinion of a doctor to prove that the employee is medically unfit to continue working.

But what is particularly disturbing is that this legislation gives the government the excuse to raise the CPF Minimum Sum Draw Down age from 62 to 65 or even older. They will reason that older workers can more easily find employment beyond 62 and so they don’t need to draw from their CPF savings. (The Minimum Sum, which now stands at $123,000, is the minimum amount of money that a person must keep in their CPF accounts. This large amount means that a large number of low-income workers have their retirement savings locked up long beyond their retirement age.) The reason, as explained the Prime Minister Lee Hsien Loong in 2007, is so that their CPF savings can last longer.

Because of this, many older Singaporeans are going to find themselves in a quagmire of potentially losing their job or taking a pay cut when they reach 62, yet remaining unable to withdraw their hard-earned CPF savings until age 65 or later. This was a concern voiced out by both Workers’ Party chairman Sylvia Lim and secretary-general Low Thia Khiang in Parliament.

Of course the real reason for all these changes is plain to all thinking Singaporeans: The PAP government does not want to have the burden of looking after our old folks if they run out of retirement savings. This, in my opinion, is typical of the PAP’s calculating and heartless style of government.

Our old folks have slogged all their lives to raise up the next generation and help grow the economy. Instead of giving them the option of retiring gracefully, the government is finding all sorts of ways and means to make them work longer. While I think it’s a good thing for people to work past retirement age, they should not be forced to do so. Indeed, many will be unable to due to health reasons or being unable to find a job.

Older Singaporeans should be allowed to draw down from their Minimum Sum from age 60 or earlier. The vast majority of them will be prudent with their spending, so as to ensure they have enough till their last days. For the minority who run out of CPF savings and have no children to provide for them, I consider it the duty of the government to provide a dignified retirement for them.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

18 thoughts on “Jobless at 62, no CPF until 65 or later”

  1. What about those who are already jobless before they hit 55, our PAP govt first thinks it is OK for them to suffer 7 years of wait to reach 62 and now think of nothing to extend their prolonged suffering for another 3 years to 65 ?

    Simply said when our PAP govt broke its original promise of withdrawal at 55 and keep shifting the withdrawal age, isn’t the CPF scheme considered a total failure ?

    To some of CPF contributors who die earlier than 65, isn’t it as good as saying

  2. Oops, sorry unfinished sentences :

    To some of CPF contributors who die earlier than 65, isn’t it the same as our PAP govt practically forcing them to kiss and say goodbye to their own hard earned CPF savings forever ?

    What’s the use of it being left behind to your descendants ? Was it ever an intention of the CPF scheme that the monies be destined for the benefit of the descendants ?

  3. “For the minority who run out of CPF savings and have no children to provide for them, I consider it the duty of the government to provide a dignified retirement for them.”

    This is a can of worms no govt, esp a pap govt, would want. This is basically saying the govt is the retirement support provider of last resort, and must take care of anybody who needs taking care of.

    Remember the howls of protest in the US when Main St had to bail out Wall St, and even GM and Ford to boot? Because the Govt/Fed assumed the role as lender of last resort and had to pick up the pieces from the irresponsible behaviour of banks and other FI’s?

    If the govt has to take care of old people, it really means our tax dollars has to be used, ie the working taxpayers’ money. Don’t expect our million-dollar ministers or civil servants to take care of them using their own pay.

    Hence there’s no such thing as the “govt” taking care of old people. It’s our tax money.

  4. The current bunch of money grabbing, self serving, mercenary, highest paid politicians in the world has no compassion, no morals and it is time all citizens vote them out of office.

    They are now nothing but a bunch of legal thieves.

  5. Singaporeans are like machines.
    Once machines are old, past their useful working life, they continue to be used and operated until the day the machine goes kaput.
    Humans are not machines, and certainly we deserve better.

  6. @Wai Leong, providing a subsistence allowance for poor, old folks is not the same as bailing out billion dollar banks and their millionaire executives. Of course its our tax money–or it could also be gambling taxes or SWF investment returns. That’s why it’s called a govt transfer. I think it is worth the money.

    You are implying that these old folks are destitute because they have been “irresponsible” with their money. I’m sure in most cases it won’t be that.

  7. Gerald,

    I know we’re not talking billion-dollar banks, but the principle is the same– it’s called moral hazard.

    My friend who lived in the US for a while used to complain about the high income taxes she paid. I said yes, but you get a lot of benefits too, including unemployment benefits if you lose your job. Her retort: why should I pay high taxes just so others can collect unemployment benefits? And if you get unemployed, I asked. She said, with my skills I’m sure I can get back on my feel quickly.

    The most impt point I wanted to make was that it’s not the “govt’s” responsibility to take care of those who can’t take care of themselves. Not unless LKY and LHL pay for it out of their own salaries.

    Any assistance provided by the State logically comes from taxpayer funds, ie from the people. It’s our money, it’s not the govt’s money. Thus we, as voters and taxpayers, should make the call– not the Govt. We got to be clear that there is always the risk of moral hazard in such a system.

  8. Your friend must be a Tea Party supporter. :)

    But seriously, there is a greater moral tragedy with allowing old folks with no money to go hungry. These folks can always be means tested, after which you’ll find the pool of genuine beneficiaries small enough to not even have to raise taxes for it.

  9. It’s the mindset that’s more impt… A lot of people used to think that welfare, unemployment benefits, etc are moral responsibilities of a govt. But nowadays people realized it’s their money, not the govt’s (and ESP not the Fed govt’s, which is so deep in debt it has no money) money, that is going to all these. So they’re starting to ask themselves such questions. Why should I pay high taxes so people can get unemployment benefits, so we can give subsidies to wheat farmers, so we can give foreign aid to ungrateful third-world countries, etc.

    We realize it’s our money, and we decide if we want to provide a safety net for those who can’t feed themselves. It may well be the answer is yes, we want to be a compassionate society. But the pt is that it’s not the govt’s duty to take care of such people, it’s ours, and we collectively decide to pay for it, despite the potential free-rider problem.

  10. Unemployment benefits are a form of government insurance, akin to the fire department or the police or the public health department. Of course, we can privatize the fire department or the police but that is just not practical. However, the government steps in to make that purchase for the rest of the society. I can’t think of any free market organization that will step in to provide that sort of insurance.

    The key point is balance. Of course, we can all have 10 percent of the population working in the police force and crime rate will definitely drop and we can all leave our doors unlocked but what is the point of living in a society like that? Likewise, unemployment benefits can also be excessive.

    There are some advantages to providing income support for the less fortunate to level out the income inequality. For example, in societies with higher income inequalities, crime rate is higher. Note that Singapore has one of the highest per capita number of police officers in the world (~7 for every 1000 resident). Because we have no social safety nets, people save excessively to the point where many couples do not have children.

  11. Waileong:
    “Remember the howls of protest in the US when Main St had to bail out Wall St, and even GM and Ford to boot? Because the Govt/Fed assumed the role as lender of last resort and had to pick up the pieces from the irresponsible behaviour of banks and other FI’s?”

    Actually, the bailout by the US government is estimated to cost less than $30 billion in total.

    “.. and ESP not the Fed govt’s, which is so deep in debt it has no money”

    Any government that issues its own currency and borrows in its own currency can never be insolvent. There has never been a sovereign country that has defaulted on debt denominated in its own currency.

  12. I think we need to differentiate between CPF money and taxpayers’ money. I do not think the people can decide what they want to do with taxpayers’ money. Like a company, the shareholders cannot decide how the company’s money should be spent (unless the shareholder controls the management too). That lies in the executive functions of the management and directors. If they do not do a good job, elect new directors and change the management, but you cannot directly tell the company what to do and what not to do. So, there is nothing wrong with the government taking care of old people. The issue is whether they should.

    For CPF money, I agree it’s the people’s money, but that said, it does not also mean the people have an absolute right to determine any thing about it. How we can utilise the money is determined by laws made by our elected. We elected the people who passed the changes.

    Instead of asking why we couldn’t have access to our money at 62, we should ask why the gvmt is doing this. Simply put, the CPF is insufficient. Costs are rising faster than wages, and people are expected to live longer. Obviously it will make much more economical sense for some people to fall between the cracks than to reduce growth and give up billions of dollars. Nonetheless, we should look at the silver lining in the latest proposal and how we can contribute to society:

    1. Hopefully if we’re jobless and have no money, we’ll fall sick and die. If we don’t die, there’ll be enough damage to our bodies such that we won’t live long anyway, proving that the CPF will be sufficient and the whole system a success. Since the people we vote for think it’s economically more viable to think of ways to earn money instead of finding viable solutions to let us live in dignity, and Singapore does not leave dead corpses rotting by the road, it will be more responsible for us to die in dignity than to live without dignity.

    2. If we die, the money goes to our descendants. Meaning our next generation will have more money to buy house or other things. At the rate the housing prices go, our children’s home may eventually need our grandchildren to continue paying off too, so leaving more money for our children will be helpful to them and at the same time guarantee that they have more money to suck than they will have on their own. If we have no descendants or relatives, all the better since they will be able to find even smarter candidates to make more money from us.

    3. This is just a prelude to the eventual increase in retirement age to 65. If we retire at 65, we can gear ourselves higher when buying property, hence helping support the price of public housing, and hence the private properties. This way, we will work ll our lives to support a price so that when the uber rich buys a property with cash and speculates, the downside risk will be reduced. By keeping the rich people rich, we can save our jobs and have 3 bowls of porridge a day. If we’re lucky enough and the global economy is such that they become even richer, we just might have some salted vegetables thrown in too!

    4. Let’s be fair. Even those who proposed the delay in the withdrawl of CPF money has CPF themselves and are equally affected right?So if they don’t complain, why should we? Surely they must be as affected as us. Sometimes we need to take one for the team. If us dying of hunger means someone else can continue eating abalone this coming and future CNY’s, we should be happy since we could not afford ourselves abalone any way.

    5. Lastly, we keep voting them and keep them in power, they must be obviously be the best and henceforth there cannot be any better way. If even they cannot save us, no one else on earth will be capable to do so. Just our luck. We just pray some of our karma better, and will get reborn as one of their descendants in our next lives.

    Things are actually not as bad as they seem. Unless we believe that someone else can do better, hey, things could be worse!

  13. I will be 55yo by end of 2011. I cannot wait to waste another 10 yrs till 65yo to get my CPF back as I have been jobless since 40yo during 1997 asia currency crisis.

    We cannot allow the PAP govt to chance rules without getting the approval of the CPF contributors. It is our money not PAP given money and PAP have to seek our approval.

    How about a NGO group or NO to CPF 65 at facebook to discuss further to find out how many of us disapproved the change to 65yo.

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