More Ways To Top CPF Accounts For Family Members

Source : AsiaOne News, Tue, Aug 28, 2007

Tthe Central Provident Fund (CPF) top-up scheme has been expanded so family members have more ways to take care of each other.

The top-up limit has been raised and CPF members can now inject funds into more family members' accounts.

These were among the key changes to the CPF Act passed in Parliament yesterday.

Manpower Minister Ng Eng Hen cited an increase in retirement needs as the population ages as a rationale for such changes.

He stressed that the family remains the main source of financial support in old age.

To encourage families to help each other save, the top-up limit has been raised to the Minimum Sum level at the time the top-up is made, not at the time when the recipient turned 55, reported The Straits Times.

This also addresses the issue of CPF members who turned 62 last year not meeting their Minimum Sum requirement when they reached the age of 55 in 1999.

The Minister provided some statistics in response to Ms Josephine Teo, MP for Bishan-Toa Payoh GRC:

Of the 22,600 CPF members who turned 62, 7,600 - or 34 per cent - were able to meet their Minimum Sum, which in 1999 was set at $60,000.

The remaining 15,000 members who did not meet the Minimum Sum had a median shortfall of $49,300.

Of the 9,700 entitled to draw down their Minimum Sum in the first half of last year, 3,800 - or 39 per cent - delayed doing so by at least one year.

Dr Ng said that as CPF rules differ for each year's cohort, it was simpler to provide data on the most recent group.

He said many members fell short of the Minimum Sum because the current rule allows them to withdraw half of their CPF savings at age 55.

The Minimum Sum is the amount people must keep in their retirement accounts after withdrawing their CPF at age 55. It is meant to ensure those who live beyond 62 will get monthly payouts for 20 years.

The Minimum Sum will be raised in stages until it hits the target $120,000. The current sum is $99,600.

To date, some of the rules have been changed.

In 2003, it was stated that in future, members can make withdrawals only if they have more than the Minimum Sum and the Medisave minimum sum.

These measures, together with the broad range of changes to the CPF system announced by the Prime Minister in his National Day Rally speech, will further increase retirement savings for members, said Dr Ng.

PM Lee Hsien Loong announced two weeks ago that the draw-down age for the Minimum Sum will be deferred from 62 to 63 in 2012. It will then be gradually raised to 65 by 2018.

Key changes to the CPF Act CPF top-up scheme:

-Top-up limit raised to prevailing Minimum Sum at time of top-up, rather than when the recipient turns 55.

-Top-ups of siblings' Retirement Accounts allowed.CPF savings, not just cash, can be used to top up grandparents' Retirement Accounts.

-Top-ups to CPF Special Accounts of spouses and siblings below age 55 allowed.

Division of CPF monies in divorce cases:

-Immediate transfer of CPF monies to the former spouse's CPF account if spouse is a citizen or permanent resident (PR). No need to first set aside Retirement or Medisave Minimum Sums or wait until the member turns 55.

-Immediate transfer of matrimonial home to the former spouse if spouse is a citizen or PR. No need to wait until refunds are made to the member's CPF account. But if home is sold, CPF monies must be refunded to the member's CPF account.