[First Drafted in Jan 2021]
So the govt has a matching top-up scheme (Jan 2021) to help Singaporeans aged 55 to 70 who do not even meet the Basic Retirement Sum in their CPF.
It's capped at $600 a year.
Up to 5 years, so technically, it's capped at $3000.
For reference the Basic Retirement Sum (BRS) is currently $96,000. (those turning 55 in 2022)
More than half of CPF members do not meet the BRS at age 55.
And even if you have the BRS, the monthly payout at age 65 is about $700 - $800. If that is your only "income" at age 65... you should hope that your flat is paid up or you have a place to stay, and you have some savings to cover additional expenses.
But... why do 53% of people not have BRS in their CPF?
Currently, the allocation to the Special Account (SA) which becomes the Retirement Account at age 55, is about 8% (on average).
To be more precise, it is 6% for those aged below 35, 7% for 35 to 45, 8% for those above 45 to age 50, and 11.5% for those above 50 to age 55.
And there is interest of 4% for the SA, and this will compound over the years.
Even a very low wage of just $800 a month, starting at age 20, with no increment over the years and no bonus, the SA balance at age 55 (with the current contribution and allocation) would be just over $100,000. Enough to meet the BRS.
So for someone to NOT meet the BRS after after 35 years of work means either a) they are earning LESS than $800 a month, GROSS; or b) they have not been working the full 35 years.
If it is the latter, this could be due to periods of unemployment for whatever reasons.
For women, many could have left the workforce for the family. At least for earlier generations.
Contemporary women and wives are less likely to give up their careers and income.
Especially if they are educated and earn more than a subsistence wage (say $1000 or less).
Another possible reason for not having a full working life, may be due to injury and disability, chronic debilitating illness, drug addiction, or jail/prison terms.
For mothers
For women who had to suspend their work and income for the purpose of child-bearing or child-rearing, it would be a show of gratitude to top up their Retirement account if they fall short. Yes, they (and we) would expect that the children they have should provide for her. But for some reasons, they may not or may not be able to.
For mothers who do not even have the Full Retirement Sum (FRS) at 55, there should be a top up of say $5000 per child. Capped when the CPF member's Retirement account reaches the FRS.
Others
This would include men, and women who were never mothers. They did not work all their lives for whatever reason - disability, incarceration, unemployable.
The disabled will need to be addressed separately. There are many considerations and factors for the disabled. Those unemployable due to behavioural reasons, such as health issues should also be considered as "disabled".
For others whose working life were disrupted or intermittent (for various reasons), how should they be helped? These CPF members could be helped with a more extensive matching grant. The 2020 scheme matches up to $600 a year, for up to 5 years. So the total grant from the govt is $3000. Matched to the non-govt contribution of another $3000, the net contribution would be $6000.
The current Public Assistance Rates (since 2013) for a single individual is $450 per month. Or about $5400 a year. Over 5 years, that's $27,000. I think we can help the CPF member who is short the BRS a little more than just $3000, when we help the destitute up to $27000 for the same period (5 years). Moreover, the grant to the RA of the CPF member is an investment. The BRS will return a payout of about $800 per month for the rest of the life of the CPF member.
The alternative is that they would be asking for help thru Public Assistance.
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