Many people have expressed in the social media that they are not happy that the CPF savings cannot be withdrawn at 55 or even 65. They felt strongly that the government did not have the right to delay payment and are doing so, as they do not have the funds to pay back the CPF.
It is quite easy for the government to print money to pay back the CPF, so this “lack of funds” is not the reason.
The stated reason of the government is that it is better for the savings to be withdrawn in monthly installments over the lifetime. This is why the CPF Life was being introduced.
While I understand the genuine intent of the government, I believe that they are following the wrong policy and are not aware of the problem faced by the ordinary people.
Here are the underlying problems:
1. Many citizens do not have any savings besides CPF. Some of them have accumulated debts (e.g. due to unemployment or education of their children) and need the CPF savings to pay off these debts.
2. The high cost of HDB flats have wiped out most of their personal savings and CPF savings, leaving them with with no spare funds to withdraw, after setting aside the minimum sum.
3. For people who are short of funds, their immediate need is to have access to the money now, rather than to keep it for the future.
It is important for the government to recognize the real financial issues facing many people, and to review their current policy of continuing to increase the minimum sum.
This article is courtesy of Mr Tan Kin Lian. The original article can be found at his blog, here.
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