Tuesday, 19 August 2014

National Day Rally 2014

Cracks in the façade - Strains in the pension fund hint at broader problems
Crowd-pleasing

EVERY year, soon after Singapore’s national day on August 9th, Singapore’s prime minister gives a state-of-the-nation address. On August 17th Lee Hsien Loong, the prime minister and son of modern Singapore’s founding father, Lee Kuan Yew, delivered his 11th such speech in his genial, if slightly mawkish, style. As usual, he offered plenty of crowd-pleasing goodies: gardens and a science centre for western Singapore; a new government department to co-ordinate public services; praise for Singapore’s “pioneer generation”. But Mr Lee also unveiled two significant changes in pensions policy that hint at some deeper systemic problems.

The first is a “Silver Support Scheme”, under which government will top up some payouts from Singapore’s retirement scheme. From the time they start working, Singaporeans and their employers are obliged to contribute a share of their monthly salary (starting at 20% for employees and 16% for employers) to the Central Provident Fund (CPF). Money in the CPF is intended to cover part of Singaporeans’ health-care, housing and retirement needs. As Mr Lee noted, the CPF rewards personal responsibility: “The more you work, the more you have in retirement,” he said. “Your retirement savings are for you, not someone else.” There is, in other words, no redistribution among Singaporeans paying into the fund.

In an economy with full employment and a favourable ratio of working-age to elderly people, a provident fund works well. But as life expectancy and living costs in Singapore have both risen, so has income inequality. The CPF has begun to look inadequate for many Singaporeans. A survey released shortly before Mr Lee gave his speech found that nearly half those questioned believed that their CPF contributions would be insufficient to tide them over during their retirement. The Silver Support Scheme—along with a broadening of Singapore’s Lease Buyback Scheme, under which the government buys back the remaining years of leases on flats—amounts to a tacit acknowledgment that a CPF which involves no redistribution at all no longer works for a sizeable minority of its citizens.


MOM defends PM Lee – says Lee’s comments “misunderstood”
The Minister for Manpower has defended Prime Minister Lee Hsien Loong’s National Day Rally speech on the changes to the Central Provident Fund (CPF) scheme

Mr Lee, who had announced that CPF members may be allowed to withdraw part of their CPF Minimum Sum in a lump sum upon reaching 65-years old, was criticised by economist Hui Weng Tat for not going far enough with the changes to ensure Singaporeans had enough for retirement.

Mr Hui, who is an associate professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, criticised Mr Lee’s speech in an article published in the Straits Times on Tuesday. (See here: “A “cosmetic change” to “pander to popular demands”: NUS economist“.)

He had slammed the CPF changes as “piecemeal” and a “cosmetic change” to “pander to popular demands.” He also accused Mr Lee of having “an overly-optimistic view of current retirement adequacy.” “It does not address the fundamental issue of the retiree not having enough in CPF savings,” he said of the changes.


The main takeaways from PM Lee's National Day Rally speech
National Day Rally 2014 on 17 Aug 2014, at ITE Headquarters & College Central. Photo: Prime Minister's Office

During the National Day Rally, Prime Minister Lee Hsien Loong outlined new and continuing efforts that sought to answer the key questions Singaporeans ask themselves — how to improve their lives, what would happen to them in old age and where the country will be in the future.

Here are the main takeaways from his speech:
  • MEETING RETIREMENT NEEDS
  • EDUCATION
  • GOVERNMENT AGENCIES
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Lee to Add Funding Options for Singapore Retirees as Nation Ages
Singapore's Prime Minister Lee Hsien Loong’s administration has increased social spending in recent years as the population ages, after decades of policies that emphasized self-reliance over state-funded welfare. Photographer: Kiyoshi Ota/Bloomberg

Singapore will broaden the options for its citizens to monetize state-subsidized homes and may offer greater flexibility for retirees to draw funds from the mandatory savings program, Prime Minister Lee Hsien Loong said.

A plan that lets elderly citizens sell part of their leases on smaller Housing & Development Board apartments back to the government will be extended to so-called four-room flats, or those that are about 968 square feet in size, Lee said. The homes developed by the government are usually sold with 99-year leases, and buyers typically fund them with the state-run pension plan called Central Provident Fund or CPF.

The home is a “valuable little pot of gold to draw on, if they need to,” Lee said in the televised National Day Rally speech late yesterday. “The CPF and your house go hand in hand to provide for your retirement.”

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Singapore to reform enforced pension saving scheme after protests

Singapore is to reform its mandatory retirement savings scheme and will provide greater support to low-income pensioners, the Prime Minister said on Sunday, in response to growing public criticism of the system.

Providing for Singapore’s ageing society is one of the biggest challenges facing Lee Hsien Loong’s government, with the present enforced savings system threatening to erode dwindling support for his ruling People’s Action Party, which won its lowest ever share of the vote in a 2011 election.

Singapore’s Central Provident Fund (CPF) has won widespread international admiration for the way it forces citizens to put aside money to fund their retirement, healthcare and housing costs, but many people are unhappy at the rate of return on their CPF savings and a rise in the minimum sum they must save before making withdrawals.

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CPF system ‘should be more flexible, help lower-income’

While the Central Provident Fund (CPF) system has worked well for most Singaporeans, the scheme alone is not enough to ensure Singaporeans have enough money for retirement, said Prime Minister Lee Hsien Loong yesterday.


Polling the audience at the National Day Rally held at ITE College Central on how much money they thought a typical couple would require to get by during retirement, Mr Lee concluded that CPF savings and the public housing programme go hand-in-hand in providing for retirement and the current Minimum Sum is “not too much”.

He noted that, by and large, seniors here are doing well, with many having savings, investments and support from their children or happily working.

related:


The 2014 National Day Rally: An impression of significance
As a statement of legacy, the 2014 rally did not make a strong impression. Perhaps, this reflected a deliberate decision by the Prime Minister not to crow on successes but to focus on the future. If so, it speaks to his character and sense of political judgement that the people are not in a mood to deliver unto him accolades for the past road taken but are looking for assurances that he has a path forward that better matches their aspirations and needs

As a claim to legitimacy for a new lease on leadership he also made, again perhaps deliberately, a weak case. Rather than anoint a successor or even indicate his preferences of attributes for a successor, he has left the question open as to who specifically or what kind of person to whom he may choose to pass on the heavy baton of premiership.

In not using his 10th Rally speech to make a strong case for his legacy or the future legitimacy of the next leader, Mr Lee inadvertently provides a default testimony to his leadership style - well-intentioned but ambiguous, impassioned but diffident, well-articulated but often more form than substance.

This is a pity for it masks the real efforts he has made to be his own man, the willingness to respond, however belatedly, to public sentiment and the strength of character and of body to bear the load of leadership for a full decade under rapidly changing circumstances. He should hope that when the time eventually comes to make a full and fair evaluation of his premiership Singaporeans will make their assessment in the context of his time and not take his measure using only the dip stick of the moment. For now, he deserves credit for trying to shape his political shadow but it would be better if he instead shaped, while he still can, the political man.


National Day Rally: 3 questions and answers on the Minimum Sum and retirement
The Minimum Sum for Central Provident Fund members turning 55 from July 1 onwards will be $161,000, up from the current $155,000 level this year

For those turning 55 from July 1 onwards, the Minimum Sum will be $161,000. This is up from the current $155,000 level this year.

The new Minimum Sum level does not apply to older cohorts who turned 55 earlier. CPF members who do not meet the Minimum Sum need not top up the shortfall in cash, or sell their property to meet the Minimum Sum.

The good news is that Prime Minister Lee Hsien Loong said that there will not be "any major increases in the Minimum Sum" beyond next year.

related:


Overview: PM Lee's National Day Rally Speech

Singapore Prime Minister Lee Hsien Loong has highlighted the need for economic growth and a cultural change to help all Singaporeans achieve their potential. Speaking at the National Day Rally on Sunday (Aug 17) evening, Mr Lee outlined how Singaporeans can attain success through different routes, regardless of their academic qualifications. To help the older generation of Singaporeans, Mr Lee also announced policy enhancements to the national savings scheme.

A consistent theme through Mr Lee's rally speech was a call to celebrate the spirit and contributions of Singapore's pioneer generation, as the nation turns 50 next year. The prime minister also built on the themes of his speech last year, including the need to provide opportunities for all Singaporeans to achieve success. A key element of this is ensuring that companies are able to prosper, and that the country remains attractive for investments.

Mr Lee said: "We must have growth in order to help our people well. So we have to be hard-headed in order to be good-hearted and just as importantly, we need a cultural change because fundamentally this is about our values, about how we value people. And Singapore must always be a place where everyone can feel proud of what they do, where you are respected for your contributions and your character, and anyone can improve his life if he works hard, everyone can hope for a better future."

related:


PM calls for cultural shift, announces key CPF changes

With the world in flux and society here having new aspirations and needs, Prime Minister Lee Hsien Loong yesterday outlined new and continuing efforts that sought to answer the key questions Singaporeans ask themselves — how to improve their lives, what would happen to them in old age and where the country will be in the future.

The Government, Mr Lee said in providing the answers, would give Singaporeans more work and study opportunities to achieve their potential, help ensure retirement adequacy, and improve public services and the living environment here.

Delivering his 11th National Day Rally speech at the Institute of Technical Education (ITE) College Central in Ang Mo Kio last night, the Prime Minister began by returning to a familiar theme — paying tribute to Singapore’s pioneer generation. To an audience which included 50 members of the generation that helped transform Singapore from backwater to First World nation, Mr Lee paid tribute to Mr Yusof Ishak, the Republic’s first President, and announced plans to honour him by naming a mosque, an academic institute and a professorship after the late statesman.


CPF changes good but devil is in the details

There were three main complaints over the Central Provident Fund (CPF) leading up to the National Day Rally on Sunday evening.

One was over whether it provided enough for retirement. Another was that people wanted more flexibility in withdrawing bigger sums from their CPF savings. The last big complaint was over the Minimum Sum levels, which will hit $161,000 next year.

Prime Minister Lee Hsien Loong squarely addressed all three issues in his speech by announcing a few significant changes to the system.

related:


Presents from PM Lee

Prime Minister Lee Hsien Loong introduced four popular — possibly vote-getting measures — in his National Day Rally speech last night. The first was to enable owners of four-room flats to enjoy the lease buy-back scheme, extending beyond current availability only to three-room flats. This will enable half the public flats in Singapore to find additional source of income each month from the HDB until their residents die. Owners of larger flats had been asking their MPs for this for quite a while.

He also agreed to let retirees, upon reaching the age of 65, to take out up to 20 per cent of their CPF savings if they meet certain minimum sum requirements. He went to some length to explain the amount set ($155,000, to be raised to $161,000 next year). After his clear explanation, his comment that not many MPs were probably familiar with the maths involved drew some embarrassed twitter from the audience.

The third measure was the “silver support scheme” for the lower income retiree generation — the amount of which will be announced at the next Budget (In February 2015).



3 questions and answers on the Minimum Sum and retirement

The Central Provident Fund (CPF) Minimum Sum will be raised one more time, to $161,000 next year. But after that, there will be no more major increases, said Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday night. Here are three things about the Minimum Sum and retirement.

What will the Minimum Sum be for those turning 55 be next year? For those turning 55 from 1 July onwards, the Minimum Sum will be $161,000. This is up from the current $155,000 level this year.

The new Minimum Sum level does not apply to older cohorts who turned 55 earlier. CPF members who do not meet the Minimum Sum need not top up the shortfall in cash, or sell their property to meet the Minimum Sum. The good news is that Prime Minister Lee Hsien Loong said that there will not be "any major increases in the Minimum Sum" beyond next year.


NDR 2014: CPF scheme to be made more flexible to help elderly Singaporeans

CPF members should be allowed the option to take out part of their savings in a lump sum if needed, PM Lee said in his speech yesterday. As Singaporeans age, the Government is trying to ensure that they do so without fretting about money.

For one thing, it is improving the Central Provident Fund (CPF) scheme to make it more flexible, said Prime Minister Lee Hsien Loong in his National Day Rally speech yesterday. He said that CPF members should be allowed the option to take out part of their savings in a lump sum, if they need to, subject to limits - 20 per cent, for example.

The Minimum Sum that a person has to set aside in his CPF account will also be raised to $161,000 for those turning 55 from July 1 next year but, beyond that, there is no need for any more major increases.


National Day Rally 2014 special

What's in a speech: National Day Rally trends in the past decade

From foreign affairs to family planning, The Straits Times looks at how the focus of Prime Minister Lee Hsien Loong's National Day Rallies has changed over the last decade, by counting the number of words used. We grouped different parts of his speeches into seven broad categories and found that while time spent on topics like the economy and foreign affairs has shortened, he has spent more time talking about education.

Others like immigration spike in certain years when the issue gets hot, while he spends almost the same amount of time on topics of Singapore's physical infrastructure, social challenges and community.

related:


5 remarkable facts about National Day Rally 2014

PM Lee Hsien Loong didn’t wear red or pink.

Jurong is going to be the new Marina.

The Lease Buyback scheme will be extended to four-room flats.

PM Lee turned interviewer.

PM Lee sang.


PM Lee signals the new way forward

Prime Minister Lee Hsien Loong's National Day Rally speech yesterday took up the theme of finding a new way forward for Singapore that he first outlined last year. Just as the pioneer generation of Singaporeans turned the promise of independence into the reality of a nation moving from the Third World to the First, today's generation needs to build sustainable edifices on the achievements of the pioneers. In some ways, this is the more difficult task because unlike in the past, when the choice for an essentially poor country was between survival and disaster, today's prosperous and secure Singapore is also more socially diversified. One important distinction is that between a new generation with impatient aspirations and an ageing population with new social needs.

Mr Lee's speech responded to the concerns of these two social segments, among others. Younger Singaporeans would be enthused by the promise of careers tied less to paper qualifications, although these remain important, and more to recognising skills learnt on the job. The work of the Applied Study in Polytechnics and ITE Review (Aspire) committee will help to create new opportunities for Singaporeans through structured education and career paths. That Deputy Prime Minister Tharman Shanmugaratnam will lead a tripartite committee involving the Government, employers and unions to drive the process forward attests to the priority being accorded to it. The public service will make an important difference by giving more weight to job performance and relevant skills rather than starting qualifications. However, no one should underestimate the size or the significance of the change that will be called for, in mindsets in society at large if the new employment culture is to succeed. This cannot be legislated: Singaporeans must learn to value one another less for their academic qualifications and more for the contributions they make to society.

Addressing another segment of the population, Mr Lee responded to its concerns about the CPF scheme. Essentially, he upheld it as a pillar of the Singapore system, but introduced flexibility into its operations. Singaporeans who wish to exercise the option of taking out a part of their CPF savings in a lump sum must bear in mind the trade-offs that this entails, and remember that those savings are meant for their old age, and that they are personally responsible for managing what is, after all, their own money. At a broader level, the extension of the Lease Buyback scheme to four-room flats, and the Silver Support scheme for the low-income elderly, will bring greater peace of mind to Singaporeans. These steps signal a welcome effort by PM Lee and his team to flesh out their new way forward to bring all Singaporeans ahead, together.


Everything you need to know about the National Day Rally 2014 in 90 seconds

Prime Minister Lee Hsien Loong’s annual National Day Rally 2014 was held at ITE College Central, Ang Mo Kio, for the second time.

Wearing a turquoise shirt this year, PM Lee addressed three topics:

  • Giving Singaporeans full opportunities to achieve their potential;
  • Providing Singaporeans more assurance in retirement; and
  • Making Singapore a home for all ages.
related: I learnt more about NDR 2014 from social media than watching PM Lee
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ESM Goh: People, Govt 'must stay united as family'

Loosening ties between people and government could pull Singapore apart unless Singaporeans demand as much of themselves as they do of the Government, Emeritus Senior Minister Goh Chok Tong warned yesterday.

Unrealistic demands and frequent criticism of the Government are straining the cohesiveness of the Singapore family, he said.

"This state of relationship between the people and the Government is part of the so-called new normal," he said. "But if this new normal leads to fractiousness, divisiveness and estrangement in the Singapore family, then we will be undoing what the pioneer generation had painfully and diligently built over many decades."



read more


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