Deborah Tan, Opinions

Is It So Hard To Make The Minimum Sum Scheme An Option? – Deborah Tan

Whether the Minimum Sum Scheme is for the better or for worse, Deborah Tan believes that the only way we will ever know is to make it an option, not a rule.

Who's right, who's wrong?

Who’s right, who’s wrong?

From the rational to the emotional, a war for our CPF monies is being fought between proponents and opponents of the Minimum Sum scheme. A stalemate seems to be happening – whether you’re for it or against it, there will always be an argument to support your case.

But the same few arguments keep surfacing ever so often. What are they:

1. “It is my money. I should be able to decide what I want to do with it!” 

2. “Do you really know what to do with your money? Look at the number of old folks who squandered their CPF away!” 

3. “The Minimum Sum keeps increasing because Singaporeans are living longer, which is why you need more set aside in your Minimum Sum – so it can last for longer.”

I’ve written about the increasing difficulty to retire well in Singapore, how it is truly a challenge to meet the Minimum Sum and still save enough money so you don’t find yourself trying to eke out a living cleaning foodcourt tables when you’re 72 years old.

People on both sides of the fence have responded vigorously – and not just to my post. As long as an article is written about CPF, you will hear them. Some say that those who want to withdraw their CPF in one lump sum are short-sighted and will prove to be a burden on society when they have exhausted their retirement funds before they die. Some say that a life with no dignity is not worth living at all, that we may as well go out with a bang. Some say that the government knows how unpopular its policies are but the fact that it is sticking to the Minimum Sum scheme shows that it really believes it is for the good of the country.  And the list goes on.

Nest-EggIn my opinion, it boils down to one crucial point:

The individual’s definition of what it means to retire well.

Can anyone – politicians and citizens – say they know, for sure, what is the best way to retire?

We can’t in good conscience say we do. We can’t use economic theories to decide how people should live their lives. We can’t accuse someone of bad financial planning when they have had no finances to plan for in the first place. We can’t say things are good and balmy when the only life some of us have known is one that is filled with going to good schools, having an overseas education, and working and living in the world’s poshest cities.

What can we do?

1. Respect that everyone has a dream
Remember when as a kid your mum told you to put your ang pow money away into a savings account so you can buy whatever toy you want at the end of the year? Similarly when we put away money for retirement, we dream about what we can use this nest egg for. Some want to spread it out and have this money last them for as long as they live. Some want to use it to travel and see the world because when they were younger they did not have the chance to do it. Some want to use the money to make the lives of their sons and grandchildren easier. Who is to say that there is only one way to spend your retirement money?

2. Understand that all of us have our own set of difficulties 
If you do manage to pay off your property loan by the time you retire, good for you. If you don’t and you have no job, no children to support you, nothing to your name, what are you going to do? For those who have children later in life, they will also be faced with the double whammy of having to pay for their kids’ education WHILE subsisting on a monthly payout. Yes, there are grants, bursaries and scholarships they can apply for, yes, there are even loans their kids can take. But why should we have to subject our children to even more debts when we can use our retirement funds to pay for their education? Sure it sounds like bad planning, not having set aside a college fund, but does everyone actually have that luxury? You ask, why can’t these kids work for their school fees? Well, let’s not assume that even if they don’t, they are useless, stupid or recalcitrant. Every family has their own story, don’t assume you know all of it.

3. Give people a choice
Perhaps the question we should all be asking is: Why can’t there be a choice? If – as the current situation demonstrates – there are really two camps, then make the Minimum Sum scheme an opt-in. Since so many people seem happy enough to remonstrate those who want to be able to withdraw their CPF in one lump sum, I’m sure they will elect to stick to the scheme even if it’s an option. Some may argue that chaos and economic ruin will follow should we be given the choice to opt out of the Minimum Sum scheme, but I liken it to Christians believing that God gave us free will so we may appreciate the horrors of Hell. If we were to never know the bad, how can we truly see the good?

Questioning the wisdom and the benefits of a certain policy does not make one ungrateful. Sure, we can compare ourselves to those living in poorer countries, to those who fear walking the streets alone at night … but ultimately, in 30, 40 years’ time, it is here in this city that we will be retiring in and looking to those worse off than us is not going to make retiring in Singapore any easier.

Making every penny count in your old age ... do you really want that?

Making every penny count in your old age … do you really want that?

[Author’s note: In my last post about CPF, there were rude and nasty comments that did not add constructively to the conversation. As such, please understand that Material World reserves the right to not approve or to delete comments that do not contribute to the topic in a rational and objective manner.]


About The Author: Deborah Tan is a founder of Material World. After 10 years of working in magazines Cleo and Cosmopolitan Singapore, she is now a freelance writer/editor who works on this website full-time. She doesn’t see why this discussion about CPF has to get ugly and so please keep your sarcasm and stings to yourself. Follow her on Twitter @DebTanTweets.


One thought on “Is It So Hard To Make The Minimum Sum Scheme An Option? – Deborah Tan

  1. Hard truth on why we cannot give people a choice: society is unwilling to let people die.

    If we as a society is willing to let people, who ran out of money after opting out of the min sum, to just perish from the lack of sustenance, instead of inevitably using taxpayers’ money to help sustain them, then yes, we can allow people a choice to opt out of minimum sum.


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