CPF Changes: More To Consider

Source : TODAY, Monday, September 24, 2007

Will CPF changes give workers higher monthly payouts?

If deferring my draw-down age means I receive $537 a month for a longer period, I do not think this is much of an incentive.

Letter from TAN ENG TECK























A LOT of information has been released over the past week about the proposed changes to the Central Provident Fund (CPF) scheme.

I wish to know if these changes will result in a higher — albeit delayed — monthly payout, or if we will simply be paid the same amount of money over a longer period.

The CPF board already encourages members to voluntarily defer their minimum sum draw-down age.

However, under the present CPF policy, this does not result in a higher monthly payout, just a longer payout period.

For example,when I turned 55 in 2002, the minimum CPF sum required was $70,000.

At a draw-down age of 62 and the present interest rate of 4 per cent per annum, this amount will give me $537 a month for 21 years.

If I defer my draw-down age to 67, I will still receive $537 a month. But I will now receive this monthly payment for 29 years.

With the proposed changes — a higher annual interest rate and incentive bonus — will deferring my draw-down age to 67 simply mean that I will receive $537 a month for an even longer period? I do not think this is much of an incentive.

CPF members can check their minimum sum payout at www.mycpf.cpf.gov.sg, clicking on the “Calculators” tab, then “CPF minimum sum payout calculator”.