• Special Account is structured almost like a long-term fixed deposit account
• Raising the Enhanced Retirement Sum in conjunction with the closure of the Special Account
• 99% of all CPF members will not be affected by this change

Let us go back to the genesis of the entire CPF system. When we first started when we became independent, at that time, the savings was low. We encouraged more people to come in and put into the national savings, and build it up. Now, more and more people are reaching at least the Basic Retirement Sum. Today, we are hitting 7 in 10 or 8 in 10 Singaporeans (who are active CPF members) who will be able to meet the Basic Retirement Sum when they reach 55. The 8 in 10 is by 2027. So we actually have a lot more people having savings parked in the CPF.

We want to continue to ensure that people can move on to CPF LIFE. Given where we are today, the Special Account pays a higher interest rate but is structured almost like a long-term fixed deposit account. I do not think there is any system in the world that has allowed you to do that.

What we have done, is to ensure that at 55, you have the option of keeping your savings in your Retirement Account, and going on to CPF LIFE. Or, you can move the excess over the Full Retirement Sum back to your Ordinary Account. That is really the policy intent.

But at the same time, we also recognise that Singaporeans are saving more in their CPF. What we have done is expand the Enhanced Retirement Sum from three times to four times (the Basic Retirement Sum), starting at the same time we close the Special Account. Singaporeans who have excess monies in Special Account, can now choose to move this into the Retirement Account up to the bigger, wider Enhanced Retirement Sum, for them to still continue to enjoy those kind of savings. From 65 to 70 years old, depending on when they choose to start the payout, they will enjoy the benefit of that compound interest in terms of the annuity of payments. With this pivot, I would say that 99% of all CPF members will not be affected.

• The CPF system is supported by the individual, employer and the Government
• The goal is to provide basic assurance for every working Singaporean

We hope that not only will Singaporeans live a long life, but also have a good life. To live a good retirement, we must remain healthy and have enough savings. Supporting seniors in retirement is a big challenge for every country. Pension systems in some countries are being funded by taxpayers. This sounds good, but as people age, as the number of people working shrinks, the number of seniors in need rises and the burden on taxpayers will also become greater. There are also some countries without a comprehensive pension system to help individuals save for retirement and this creates a huge burden on individuals.

In Singapore, we adopted a different approach that is more unique. Our CPF system is held together by individuals, employers, and the government. Every individual contributes a portion of his income into his CPF accounts every month. The employer also contributes to CPF, and the Government manages the funds, while providing risk-free and guaranteed interest returns. We also take special care of those in need, especially low-income workers. We will supplement their income and make regular top-ups to their CPF accounts. Through these three areas of support, we build a comprehensive social safety net in Singapore.

As the population ages, how can we help Singaporeans better prepare for their retirement? First, we need to train them well, and ensure that everyone has a job. If individuals work consistently, they should have enough CPF savings to buy a house, pay for their medical bills, and support their retirement needs.

We also made an important change a few years ago, which is to implement the CPF LIFE (CPF Lifelong Income For the Elderly), which is a national longevity insurance annuity scheme. This ensures that everyone has a sum of money paid out every month. For example, a young working adult should have accumulated the Basic Retirement Sum in his CPF account by the time he reaches 55, as long as one works and contributes to CPF consistently. That is to say, 65-year-olds (in 10 years’ time) should receive a monthly pension of around $900. Our goal is to ensure that every working Singaporean in this country has this basic assurance. Of course, if you have a higher income, you will save more money. When you retire, you may have the Full Retirement Sum. This means that you will receive a monthly pension of around $1,700 (at age 65 in 2035) with the Standard Plan.

Through these different measures, we can help Singaporeans save for retirement, and have peace of mind in their old age. Our CPF system is one of the best in Asia. And, of course, we will continue to improve the system, so as to ensure that we meet the current and future needs of our people.

• We need to consider whether this will affect Singapore’s competitiveness and Singaporeans’ employability
• The Government seeks to find a balance through tripartite partnership

I know that everyone hopes for the employer CPF contribution rate to increase. However, in the entire framework, we have to consider if this will affect Singapore’s business competitiveness, and consequently, Singaporeans’ employment. Hence, we have to find the balance. Through tripartism, to be able to find a framework that best suits the current social and economic situation, that is the best outcome.

• Self-reliance is a key principle, but the system is not weighted only on individual contributions
• The Government provides a range of support, such as Workfare and CPF housing grants
• The Government supports the young and cares for the seniors

Self-reliance is a key principle we have continued to uphold, but it is not the case that the system is all weighted only on individual contributions. In fact, it has evolved over the years, and the Government has been doing a lot more to contribute our share in the CPF system to support those who are more disadvantaged. We've been doing this consistently over the last 20 or 30 years, especially as we saw income gaps widening in our society.

So we provide a whole range of different support. We have Workfare for those who are working and in the lower-income groups. We provide CPF housing grants. Recently, we introduced the ITE Progression Award for ITE grad students and graduates. So when you look at all of these amounts that we provide for a young person entering the workforce today, by the time they reach 65 would have received something like $150,000 in government support in their CPF. That's a lot of money.

And we are not just supporting those who are young, that’s important, but we also look after the seniors because the seniors who are with us today may not have the chance to benefit from some of these improvements in the CPF system. We give packages to certain groups of seniors. We had the Pioneer and Merdeka Generation packages, providing a lot of help for their healthcare. And then more recently, we looked at the figures and the statistics, and we saw that even some young seniors, may have difficulties meeting their retirement needs. And that’s why we introduced the Majulah Package, with a component that’s Earn and Save. So if you earn, you do your part, you are working, the Government will provide something into your CPF to help boost your retirement savings. So these are ways in which we are helping all Singaporeans support their CPF, particularly the disadvantaged groups, both young and old.

And again, it reflects very importantly the social compact we want to have in Singapore, the society. We want to be able to lean forward to make the CPF system more progressive, to temper and reduce inequalities in our society, to have a fairer and a more inclusive society where no one is left behind, where everyone feels they are supported and we can all benefit from the nation's progress.

• Any changes to the CPF system should enhance and improve Singaporeans’ retirement savings
• The CPF system we have today is the result of continual enhancements
• When concern arises, the Government consult and engage

We are very careful whenever we make changes to the CPF system. Any change to the CPF system that we put in place should enhance and improve Singaporeans' retirement savings, not detract from it. So, each time we consider a change, we will think through very carefully. If there is some impact, we can do things like phase out the change. (For example) so that it doesn't impact present groups, and it only is introduced for new cohorts, as we have done when we rolled out CPF LIFE. So, this will be the same attitude and approach we take each time we go about improving the CPF system.

The CPF system we have today is the result of continual enhancements. If we had taken the mindset (of), cannot change the CPF system at all, everything must be static, we will not have the CPF system today. But because we were able to improve, change, fine-tune, and each time we make a change, yes, there is some concern, there will be some groups who worry, but we understand that. We consult, we engage, and we bring everyone together to appreciate the benefits of the change. That's how we have been able to get the CPF system to where it is today, a retirement system that is recognised as one of the best in Asia.

But we do not want to be complacent, we do not rest on our laurels. I think there will be new needs going out into the future, there will be more demands that Singaporeans may have, there may be longer lifespans, which we have to cater to. We will continue to study, review, and see how the system can be improved. But each time we make a change, we will engage widely and comprehensively, and we will ensure everybody comes along to buy into the change, and make sure that we all benefit from these changes.

• We have to be prepared to stay employed and work longer
• Implemented CPF LIFE to provide payouts for life

We could see the trends. Even 20, 30 years ago, we could already see the trends. And we have been grappling with this. When Singapore started out in the 60s as an independent country, our average life expectancy was about 60 plus. People retired in their 50s and they just needed to look after about 10 years of retirement. Nowadays, average life expectancy is around 85. And if you drill into the data, you have more and more people who are living beyond 90, even beyond 100. So when you retire, you have quite a long period of retirement to look after and to ensure that you have enough funds for your retirement years.

What is the answer then? How do we help everyone ensure that they have peace of mind during retirement?

I think there are two parts to it. One is we have to be prepared to stay employed and work longer. And that’s why we have been talking about raising the retirement age and the re-employment age for some time. Today our retirement age is 63, the re-employment age is 68, which means employers must be prepared to offer the seniors a re-employment contract to work up to 68. And we have shared that we plan to raise this to 65 and 70 by 2030. But we also know that it’s not easy for older workers to stay employed. And so we are not leaving Singaporeans to fend for themselves. It’s one major reason why we are investing so much in SkillsFuture, we want to make sure that we continue to reskill and upskill our older workers, give them a substantial injection of new skills so that they can stay competitive and relevant.

The second way we help is when someone retires, for example, at 65, you want to ensure that their retirement savings can go on throughout their lifetime no matter how long they live. So we have CPF life which we implemented sometime back, and this provides an annuity payout for the individual’s lifetime. And if you have your Basic Retirement Sum at 55, by the time you are 65, you should be able to get a CPF LIFE payout of around $900 a month on the Standard Plan (in 2035). If you are able to work in a job that pays more, you accumulate the Full Retirement Sum, the payout will be higher at around $1,700 a month (in 2035). So it’s a scheme that allows you to design payouts, provide some flexibility. You can decide how much you want to save, and you can design the payouts to suit your own lifestyle and needs.

What we want to do is to assure every Singaporean is that so long as you make the effort, you work consistently throughout your lifetime, it doesn’t mean that you have to work every single year, but as long as you put in consistent work, and if you start young, by the time you get old and you want to retire, you should have enough protection through the CPF system to provide for your retirement. That’s our assurance to all Singaporeans.

• Longer lifespans, ageing workforce, rapid technological advances will impact people’s jobs and ability to find jobs
• The Government seeks to continually improve the overall system, to give Singaporeans a greater sense of assurance

The broad trends are things that all of us are concerned about already. Things like longer lifespans, ageing workforce, rapid technological advances, which will impact on people’s jobs and ability to find jobs. So these are things that we have already identified.

A lot of these concerns were also raised when we had our Forward Singapore engagements. That’s why we have already been making changes in recent years. The Majulah Package arose from the Forward Singapore conversations. The JobSeeker Support scheme arose from those engagements as well. And we are continuing to see how we can improve our overall system, not just CPF itself, but the overall system to give Singaporeans greater sense of assurance that their basic needs will be looked after throughout their life.

When we talk about CPF, it’s not just about CPF changes alone because each time we improve job security, each time we enhance SkillsFuture, we are helping Singaporeans stay employed for longer. We are helping Singaporeans attain better jobs with better pay and all this will eventually contribute to better retirement savings, which will help Singaporeans for their lifetimes.