State-funded pension means higher taxes

choongyong.koh — Thu, 28 Sep 2006 10:08:09 -0000

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Sep 28, 2006

PLEASE refer to the letter 'Retiree backs call for pension for elderly' (ST, Sept 25) by Mr Retnam Thillainathan, and 'Give elderly a pension, says ex-NMP' (ST, Sept 21), by Dr Kanwaljit Soin, who proposed a state-funded pension scheme for the elderly.

A state-funded pension system will require raising taxes for younger working adults and the public to pay for the pensions of retirees.

Taxing the young to pay for the old will become unsustainable with our low birth rates and ageing population.

Presently, one in 12 Singaporeans is over 65 years but this will increase to one in five by the year 2030.

Our CPF system is more robust and sustainable because it requires each generation to fully fund its own retirement needs. It is also fair because each person draws out what he has contributed over his working life.

To assist older Singaporeans to improve their retirement adequacy, the Government periodically tops up their CPF accounts, whenever the economy does well. Since 1996, we have given out $4.7 billion in CPF top-ups.

In addition, the Government also encourages families to look after their older members. Through the Maintenance of Parents Act, we ensure that children honour their responsibility to take care of their parents.

For those in need, various public assistance schemes and Medifund also provide financial assistance.

Jean Tan (Ms)
Press Secretary to Minister for Manpower

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State-funded pension means higher taxes