The CPF system used to be the pride of Singapore. It was a good and fair system. It was popular. It helped to build up the economic backbone of Singapore during our early years.

However, the CPF system has become quite unpopular in recent years. Some of the complaints are:

a) Low interest rate paid on the savings
b) Frequent changes in the rules on the use of the CPF savings
c) Delay in withdrawal of the savings at and beyond 55.
d) In spite of the high contribution to CPF, many people find the retirement income from CPF to be inadequate.

Many people have started to distrust the CPF system. They consider it another scheme by the government to take away their savings.
We need to revise our approach towards CPF. We need to rebuild the trust in the CPF and let the citizens know that they are getting a fair deal.

Choice of investing their CPF
We need to allow the citizens a choice in investing their CPF funds. We need to allow them to earn a market rate of return if they are willing to take the market risk. But we have to provide them a small number of suitable options.

Withdrawal at 55
We should allow them to withdraw their savings at 55, which was originally promised to them. Some of them need to take out the savings earlier to pay off debts or to put to some suitable use.

But we should also help them to avoid making disastrous decisions in investing their savings. Too many people have bought the wrong investments or made losses in running a business.

I suggest that the CPF member should attend a counseling session by a financial adviser before they withdraw their savings. Perhaps after the counseling, they may become aware about the risk of investing on their own.

Fixed deposit
I suggest that CPF should offer them the option to keep their money as fixed deposit with CPF on 1, 2 or 3 years at an attractive interest rate, which should be higher than the bank. Many CPF members will be willing to keep their savings in the CPF if they know that they can withdraw it on its maturity. They are likely to renew the deposit, if they do not have any immediate need for the money.

CPF Life annuity
The CPF Life annuity should be offered as an option. Some members may find it to be more suitable for their needs, especially if they do not have any children or beneficiary to take over their savings.

Conclusion
I suggest that CPF should return to its original structure and allow the savings to be withdrawn in full at age 55. Many members may be willing to keep the savings with CPF if it is voluntary and offers an attractive return compared to what is offered by the banks.

Tan Kin Lian