MOST Singaporeans know that at the age of 55, they can withdraw their hard-earned savings in the Central Provident Fund (CPF).
But how many also know that they can make withdrawals earlier, under special medical conditions?
Since 1965, the CPF Board has allowed members to make such withdrawals if a permanent disability leaves them unable to work.
The rule was further relaxed last year when the Government said the provision would also apply to those who contracted a severe medical illness, including one that is terminal.
The legislative change is aimed at providing a source of income for such needy Singaporeans, to reduce the financial burden on them and their families.
But public awareness of this policy may not be pervasive.
Each year since 2002, an average of 700 members withdrew their CPF because they were physically or mentally incapacitated, said a spokesman of the Ministry of Manpower (MOM).
He could not provide pre-2002 figures for comparison, nor disclose the amount of CPF monies released on those medical grounds.
Could the life insurance market, where there are about 14 players, shed some light?
At NTUC Income alone, the insurer annually processes some 700 claims for critical diseases which include paralysis and coma, said a spokeswoman. In addition, the company receives about 140 claims for total and permanent disability, and terminal illness, she told Today.
To Dr Noreen Chan, the figure of 700 for early CPF withdrawal "seems very low", said the chief executive officer and medical director of Dover Park Hospice.
Based on anecdotal evidence and her dealings with terminally ill patients, Dr Chan said the early withdrawal of CPF for serious medical needs "is not something we think about when we're well".
She feels there needs to be more awareness about how one can deal with future crises.
"The Government has always tried to encourage financial planning — that isn't just to do with making sure your CPF lasts. We need to be more aware of what happens when we get sick during our active working life," said Dr Noreen Chan, chief executive officer and medical director, Dover Park Hospice.
Going by the situation at Dover Park Hospice, the proportion of Singaporeans caught in such a mid-life bind is not small. Between 20 and 25 per cent of its patients are 55 years old and below, said Dr Chan.
Her hospice, which handled 410 inpatient cases in the last fiscal year, is among a total of eight facilities providing services for the terminally ill here, according to information on the website of the Singapore Hospice Council.
Some of the facilities will guide a patient and his family through financial matters such as the subsidies available and whether he is eligible for early CPF withdrawal.
To apply for early withdrawal under special medical conditions, a CPF member has to give the CPF Board a recent doctor's memo on his health status. The board will then obtain a medical report from his doctor or refer the member to the board's panel of doctors to assess his application.
If deemed terminally ill, the CPF member will be allowed to make a lump-sum withdrawal of all his savings in the Ordinary, Special and Retirement accounts, plus Medisave Account savings above the prevailing Medisave Minimum Sum of $28,500.
If a member is deemed not terminally ill but severely impaired either physically or mentally, the amount he can withdraw early will be determined "on a case by case basis and, where applicable, subject to sufficient funds being set aside in their CPF for their medical and other needs for their remaining life span", said the MOM spokesman.
New CPF rates fair but ease investment rules
ReplyDeleteTHE new CPF interest rates are fair. However, for people with higher risk appetites and feel they can do better than the CPF Board, it is unfair to rob them of the opportunity to make more by imposing illogical rules for investment.
Here are a couple of rules that I hope the Government will re-look:
The new requirement to set aside $60,000 before any investment can be made is a very prudent move. But the need for $20,000 in the Ordinary Account and a similar amount in the Special Account is unnecessary. It should not matter where the $60,000 is.
If a CPF member already has more than $60,000 in the Special Account, why force him to have an additional $20,000 in the Ordinary Account that will earn only 2.5 per cent (not 3.5 per cent) a year?
The stock limit is currently set at 35 per cent of Investible Savings. I propose that this limit be removed as there is currently no limit set on investment in unit trusts, including those that invest in equities.
It is a misconception that unit trusts are safer than stocks. A prudent stock investor usually makes more or loses less than a prudent unit-trust investor by virtue of the sales charges and expense fees imposed on the latter.
Investors who switch to unit trusts because of the stock limit are forced to contribute to the earnings of fund managers and distributors.
Anyway, once the Minimum Sum is set aside, the CPF member should be given the freedom to take responsibility and bear his own risks for the rest of the money.
If the Government insists on controlling the way CPF members allocate their investments, the stock limit should at least be increased to a higher percentage of Investible Savings, in view of the new requirement to set aside $60,000.
Tan Kok Kiam
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RAISE STOCK LIMIT
In view of the new requirement to set aside $60,000, the stock limit should be raised.
Source : The Straits Times, Oct 31, 2007