Successful Appeals for Earlier Withdrawal of CPF Payouts

12 Er Dr Lee Bee Wah asked ask the Minister for Manpower (a) in the past three years, what is the percentage of successful appeals for earlier withdrawal of payouts by CPF members who had to retire early; (b) what are the main reasons for disallowing the appeals; and (c) whether the Ministry will consider another option for CPF Life payments that start pay-outs at the minimum retirement age.

The Minister for Manpower (Mrs Josephine Teo): Mr Speaker, on reaching the age of 55, all CPF members are eligible to make CPF withdrawals of up to $5,000, subject to available balances in the Ordinary and Special Accounts. Those with savings above the applicable Full Retirement Sum can withdraw all the monies above that amount. Those who own a property may also withdraw their savings above the Basic Retirement Sum using property charge or pledge.

Under the Medical Grounds Scheme, CPF members may apply to withdraw or start their payouts before the CPF Payout Eligibility Age of 65. The eligibility criteria include being permanently incapacitated, terminally ill, or having a severely impaired life expectancy due to illness. Such applications have to be accompanied by the relevant doctors’ certification. In the past three years, about 65% of applications under the Medical Grounds Scheme were successful; the remaining 35% were not successful because applicants did not meet the eligibility conditions. Unsuccessful applicants were referred to other avenues of help, such as Workforce Singapore (WSG) and the Social Service Offices.

In the last decade, the employment rate for residents aged between 60 and 64 has risen from 47.2% in 2008 to 60.4% in 2018. The unemployment rate for the same age group has remained consistently below 3% in the past five years.

A contributing factor is the introduction of re-employment legislation in 2012, which made it an obligation for employers to offer eligible employees continued employment after the age of 62, up to the age of 65. Re-employment has made it possible for many Singaporeans to work beyond the age of 62. Of those eligible for re-employment and who wished to continue working, over 98% were offered re-employment. In 2017, the re-employment age was raised further from 65 to 67.

In 2018, a Tripartite Workgroup on Older Workers was formed to review, among other things, the longer term relevance of and the next moves on the retirement and re-employment ages. However, as the CPF Pay-out Eligibility Age was raised to 65 only in 2018, MOM does not have plans to lower it. The Medical Grounds Scheme will also continue to be available to eligible members who may need to withdraw or start their payouts earlier than age 65.

Er Dr Lee Bee Wah (Nee Soon): I have one supplementary question. I am not asking Minister to lower the pay-out age to 62. Majority are okay with the pay-out age of 65. But from time to time, there are residents who approach me. They are retired at 62, there are no "medical grounds" justification, they are healthy. What they do not have is money. So, they are asking whether CPF Board will consider another option. For majority, the pay-out age is 65, whereas some can get it earlier. They are prepared to get a lower sum but at the retirement age of 62.

Mrs Josephine Teo: Mr Speaker, I am glad to hear the Member's clarification on what she is asking. If I heard her correctly, it is to make the pay-out eligibility age lower for some people who want it, but maintain it at 65 for the rest. May I ask the Member whether she thinks that it is possible for us to do that – allow some people to have a lower age, and then require other people to stick to the pay-out eligibility age of 65? The option has to be made available to all?

The hon Member Er Dr Lee Bee Wah nodded in agreement.

Mrs Josephine Teo: I see. I think we have explained it before. If you make early withdrawal an option for all, then in effect, it is really a reduction of the pay-out eligibility age. Today, the pay-out age can already be voluntarily deferred to 70 but the pay-out eligibility age remains at 65. That is the earliest that the person can withdraw.

So, the substance of the Member's request is really not an option but a reduction. I hope I have correctly understood the Member's suggestion.

Er Dr Lee Bee Wah: Yes, it is true that currently, for those who want to extend and withdraw their money later, it is available as an option. It is only for those who have money who can afford to opt to withdraw their CPF money at a later age. But there are some who do not have money and they would like to withdraw earlier. So, we can have: Option 1 – withdraw at 62 years and at much lower sum; Option 2 – is the current one where withdrawal of the money is at age 65; Option 3 – withdrawal of the money at 70 years old.

Mrs Josephine Teo: Mr Speaker, I think we can establish that the substance of the Member's suggestion is to reduce the pay-out eligibility age. Here, some international benchmarking could be helpful. By international standards, setting the pay-out eligibility age at 65 is not unusual at all. Among the 35 OECD countries, well over half have pension withdrawal age at 65 or above. In fact, the highest today, as far as I know, is 67. In the light of increasing longevity, people living longer and the likelihood of them working longer, some countries have already set in motion the raising of the pension withdrawal age. In the case of the Netherlands, for example, the pension withdrawal age will go up from 66 to 67 in the year 2021. In the case of Denmark, it will go up, if I recall correctly, from 65 to 67 in 2022. In the case of Germany, it will go up to 67 by 2031.

Against such a backdrop, we must really ask if it is wise to lower our own pay-out eligibility age for all – there will be no option, it will have to be for all – especially considering how we now have re-employment legislation that puts an obligation on the employers to offer work up to 67.

My sense is also consistent with what the Member said earlier, that most workers understand this. They understand we are living longer. In the last few months since we started the tripartite workgroup on older workers, I have met many union leaders. At the NTUC's suggestion, we did this in clusters – aerospace, logistics, healthcare, financial services and even the public sector – a very diverse group of workers. We talked about many things. The CPF pay-out eligibility age did not come up very much at all. What has been said very clearly is that the workers want the opportunity to work longer. This is also consistent with the focus group discussions that we held with members of the public. They want to keep working and save more. I hear these workers and I understand them. I want to be able to help make it happen.

At the same time, the employers have also expressed their concerns to me. They have worries about their increased obligations and their considerations, I think, we must not also dismiss lightly.

The main priority for now is to build a tripartite consensus on the way forward. And this tripartite consensus concerns the retirement age which is currently 62, the re-employment age up to 67 today. The new tripartite consensus is an important one and it is the topmost of my priority this year. In this process, we take reference from what we have always done in the past, which is the workers express their views, the employers express their views, and we try to find a common ground for the best way forward. That is how we did it with the re-employment age of up to 65 and then subsequently to 67. If we can have a good new tripartite consensus on the retirement age and the re-employment age, it will point the way forward for all of us that is helpful. I ask for some time to get this done.