Aged: Penniless in a land of plenty

Posted by Seah Chiang Nee under Policy Watch on 23 July 2007

For many elderly folk, Singapore is a tough place to live in. Many senior citizens just do not have the skills for the modern economy.

WITH better living, Singaporeans are enjoying one of Asia's longest life expectations, averaging 82 years but it's not everyone's cause for celebration.

In fact, for half the retirees with insufficient Central Provident Fund (CPF) savings, it could be a terrible burden. Singapore is also one of the region's most expensive cities to retire in.

The government obviously sees the downside of a citizen who retires at 62 and lives for two decades without any income.

Last week, it served notice of its intention to push the retirement age by three years to 65. In fact, where possible, it prefers citizens to carry on working until 70.

However, there is some contention over the prospect of a delay in the withdrawal of the minimum CPF savings from 62 to 65. .

CPF is the republic's mandatory retirement fund in which a member can withdraw a portion at 55, but has to leave behind a minimum sum. From this, he or she receives a monthly payout from age 62.

This sum now stands at S$96,000 (RM220,800) and must be gradually topped up to S$120,000 (RM276,000) by 2013.

"I think it is quite reasonable to raise it to 65 if our objective is to raise the employment rate of this group of people," said the minister overseeing issues on ageing, Lim Boon Heng.

He is apparently preparing the people for the inevitable.

Twenty-five years ago when retirement and the CPF withdrawal age was 55, it was a different world. At that time life expectation was 70 years, 12 years less, so a change comes as no surprise.

Public reaction has been strong. CPF is one of the most cherished things in a Singaporean's life, and any talk of delaying withdrawal is bound to bring out strong emotions.

(In the 1984 general elections, the government's vote fell by a hefty 12.4% just because of a rumour that repayment would be delayed beyond 55.)

It is understandable. For many elderly folk, Singapore is a tough place to live in. In the first place, many do not have the skills for the modern economy.

After a lifetime of work, they want to take charge of their savings and spend it as they wish. The trouble is that while the majority is financially conservative, others make a mess of it and get into trouble.

Many are simply not capable of managing such a large fund on their own. Either they become fair game for cheats or they gamble or spend lavishly on wine or women.

"When the money is gone, they become homeless or penniless, cursing the government for not looking after them," said a small businessman.

A year ago I met a weeping gentleman in a hospital room being consoled by two nurses. A China woman whom he had befriended had cheated him of S$60,000 (RM138,000) of his CPF savings, he told the nurses.

In a fast-paced city very much preoccupied with the bottom line, the elderly get less respect and care than they deserve. In failing health and overwhelmed by Singapore's new technologies, many are still toiling in menial work.

Liberal-minded Singaporeans decry two perceived wrongs. First, senior citizens are given only the minimum level of government financial help considering the state's enormous wealth.

Second, they resent the government's control on people's retirement money.

"Something must be fundamentally wrong with society if one cannot retire after working for 30 to 40 years," exclaimed a young professional.

Unlike in many western countries, Singapore has little or no social security or welfare. These factors partly explain the city's low birth rates.

Living in a highly competitive nation has helped to turn Singaporeans into some of the most pessimistic people in the region when it comes to retirement savings.

The Thais have the most sanguine feelings about retirement, according to a survey by American International Assurance (AIA).

Some 61% of Thais believe they will have sufficient funds to retire, based on current savings patterns.

This contrasts with just 24% of those surveyed in Hong Kong, 47% in Malaysia and 27% in Singapore.

While the government wants people to work longer, until 70, many Singaporeans actually want to quit earlier.

A study by a financial protection player, AXA Group, showed that Singaporeans, on average, consider the ideal retirement age as 54, the earliest among the 15 countries surveyed.

Those in Hong Kong, Canada and Australia would opt to retire at 55, while the Japanese want to wait till they are 61.

The ruling People's Action Party constitution still declares it as a "democratic socialist" party, but in the past 40 years, the "socialist" part of it has been in decline.

For their part, Singaporeans are learning to depend less on the government for their needs, including jobs and cheap public services

Sources and Relevant Links:

The Star Penniless in their twilight years in a land of plenty 30 June 2007

The Star Growing old: Pushing a cleaner's brush instead of a grandchild's pram 3 March 2007

Today Low-wage workers do not contribute to CPF 19 June 2007

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