Statistics of CPF members meeting minimum sum requirement at age 55 – a roller-coaster ride?

Posted by on March 15, 2012

~by: Leong Sze Hian~

I refer to the report “Percentage of CPF members meeting Minimum Sum on the rise: Tharman” (Channel NewsAsia, Mar 5). It states that “The percentage of active CPF members who meet their Minimum Sum at age 55 has been improving over the years, from 36 per cent in 2007 to 45 per cent in 2011. Speaking in Parliament, Deputy Prime Minister and Manpower Minister, Tharman Shanmugaratnam said this will improve with each successive cohort, as educational profiles improve and lifetime incomes rise”.

However, according to a report in the previous year “Fewer S’pore citizenship, permanent residency granted: report” (Channel NewsAsia, Dec 17, 2010):

“Another issue for the government involves the CPF minimum sum requirement, where S$123,000 must be set aside for retirement. In 2009, only 49 per cent of workers were able to meet the requirement upon reaching 55 years old”.

So, does it mean that those who could meet the Minimum Sum increased from 36 per cent in 2007 to 49 per cent in 2009, and then declined to 45 per cent in 2011?

According to the report ‘CPF Trends: Minimum Sum Scheme‘ – “Among the active members who turned 55 in 2008, about one-third (33.8%) met the required MS (Chart 2). This is a drop from 57.1% in 1996, and could be attributed to the increase in the required MS from $40,000 in July 1995 to $106,000 in July 2008”.

The chart in that report shows that the percentage decline was in almost a straight line, and the 2007 figure was around 36 per cent. This coincides with the ’36 per cent in 2007’ figure reported in the recent Parliamentary sitting.

15.2% jump in 1 year?

So, does this mean that the percentage declined from 37 in 2007 to 33.8 in 2008, increased dramatically to 49 in 2009 (a jump of 15.2 per cent in one year), and then declined to 45 per cent in 2011, instead of just simply what was reported in Parliament as “has been improving over the years, from 36 per cent in 2007 to 45 per cent in 2011”?

Minimum Sum in cash or with property?

What is perhaps even more intriguing was what the former Minister of Manpower said in Parliament last year that “For the cohort turning 55 in 2010, over 40% of active CPF members, or about 12,600 members, attained their cohort MS set at $123,000 after lump sum withdrawal. Of these members, more than half have set aside the full cohort MS in cash”.

Because if the percentage was 49 in 2009, over 40% in 2010, and 45 per cent in 2011, does it mean that it was like a roller-coaster ride from 57.1 in 1996 to 33.8 in 2008, 49 in 2009, just over 40 in 2010 and now 45 in 2011,  instead of just simply what was reported in Parliament as “has been improving over the years, from 36 per cent in 2007 to 45 per cent in 2011”?

Since the former Minister of Manpower said “Of these members (12,600), more than half have set aside the full cohort MS in cash, does it mean that only over 20% (more than 6,300 members) had their Minimum Sum in cash with the other half of the members being able to have their Minimum Sum after pledging their property?

Could this be the reason why there was a dramatic jump of 15.2% in the year 2009, because the CPF report was referring to the Minimum Sum in cash, whereas the Ministers were referring to meeting the Minimum Sum with cash and property? 

If you are confused by now, so am I!

What about inactive CPF members?

Couple this with the fact that there were also 1,642,900 inactive CPF members, out of the total CPF members of 3,343,300 in 2010, (Department of Statistics Labour and Productivity report), perhaps we could get clarity if someone can tell us how many were in the age 55 cohort in 2011, and how many of these met the Minimum Sum entirely in cash?

How many in age 55 cohort have Minimum Sum in cash?

As I estimate the 55 cohort to be about 60,000 plus since there were 182,700 active CPF members over age 50 to 55 and another estimated 100,000 plus inactive CPF members, could this number be as little as less than 10,000, or less than 1 in 6?

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.