CPF's central philosophy of self-reliance remains as pertinent as ever: SM Lee

It avoids burdening next generations with older generations' retirement needs, he says

- Christine Tan

The Central Provident Fund's (CPF) core philosophy of self-reliance remains as pertinent as ever, with an emphasis on each generation funding its own retirement needs based on individual savings.

With this approach, Singapore avoids burdening younger generations with older generations' retirement needs, Senior Minister Lee Hsien Loong said on July 5 at the launch of the CPF's 70th anniversary commemorative book, Save & Sound: 70 Years Of CPF.

"The ethos of fairness and personal responsibility fosters the right attitudes towards work, retirement and active ageing," SM Lee said at the event held at Our Tampines Hub, which Manpower Minister Tan See Leng also attended.

"This is in sharp contrast to the countries that have adopted tax-based 'pay-as-you-go' (PAYG) pension systems," he added.

In PAYG systems, people have no incentive to retire later. SM Lee said it is politically very difficult to even broach the topic of pension reform.

"Because in these systems, retirement benefits are entitlements, paid for not by themselves, but by the next generation of taxpayers," he said.

SM Lee added that while self-reliance works well for the majority of the population, Singapore recognises its limitations for lower-income workers and those who have not been in the workforce, such as housewives.

He said the Government complements members' own savings with targeted state support for those who need it more.

"We have built this into structural components of our social safety nets, such as the Workfare Income Supplement scheme, the Silver Support Scheme and tax incentives to encourage voluntary CPF contributions from family members," he said.

SM Lee added that the Government also provides additional support through packages for the Pioneer, Merdeka and Majulah generations, as well as periodic CPF top-ups in the annual budgets whenever the economy does well.