CPF: Some issues and questions?
The CPF Board is a statutory board under the Ministry of Manpower (MOM).
In Singapore, the Central Provident Fund (Abbreviation: CPF; Chinese: 公积金, Pinyin: Gōngjījīn) is a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, and housing needs.
Highest pension contribution rate in the world?
Working Singaporeans and their employers make monthly contributions of up to 36 per cent of their salary to the CPF and these contributions go into three accounts:
Ordinary Account - the savings can be used to buy a home, pay for CPF approved insurance schemes (CPF: Issues and questions?), investment and education.
Special Account - for old age and investment in SA (Special Account) approved financial products.
Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance schemes.
Many not aware of CPF usage for housing limits?
The maximum amount of CPF you can use is a percentage of the lower of the purchase price or the value of the property at the time of purchase, subject to the Valuation and Housing Withdrawal Limits (where applicable).
CPF education use limits?
Under the Education Scheme, you can use your CPF savings to pay for your children’s local tertiary education at the approved institutions. CPF savings cannot be used for overseas education. If you are planning to use your CPF savings for your children’s education, do note that there is a limit on the amount of CPF savings that can be used.
Another issue is why is it that CPF cannot be used for private universities including SIM?
The Medisave withdrawal limits are generally sufficient to pay the charges incurred by a patient staying in a Class B2/C ward in a restructured (public) hospital. However, should you or your dependants decide to stay in higher class wards or seek treatment from private hospitals, you or your dependants may have to pay part of the bill in cash.
Also, if your illness, treatment or medicines are classified as non-standard - the costs may be very high and way beyond the Medisave eligibility and withdrawal limits, or Medishield cover.
Ever increasing CPF Minimum Sum, MRA, etc?
From July 1 2013, CPF members who turn 55 between 1 July 2013 and 30 June 2014 will need to set aside a minimum sum of S$148,000 in their Retirement Account.
The minimum sum for those who turned 55 in 2012 was S$139,000.
You will need to set aside the CPF Minimum Sum (MS) in your Retirement Account (RA). If you have the full MS but have less than the Medisave Required Amount (MRA), you are required to make a top-up to your Medisave Account with part of the CPF balances from your OA and/or SA to meet the prevailing MRA ($38,500).
You will be placed on CPF LIFE if you are a Singapore citizen or permanent resident born in 1958 or after, and have at least:
$40,000 in your Retirement Account (RA) when you reach 55 years old; or
$60,000 in your RA when you reach your drawdown age (DDA) of age 65
Since January 2013, the Medisave Required Amount (MRA) in the Central Provident Fund (CPF) was raised to S$38,500 from S$32,000 in 2012.
The MRA refers to the amount that must be set aside in the Medisave Account, after the CPF Minimum Sum requirement has been met.
How many have more than $177,500 in their CPF at 55?
In other words, for those who can meet the MS of $148,000, they must also meet the MRA of $38,500 - a total of $177,500 being held back in their CPF before they can withdraw the excess at age 55.
Low fixed pay-outs for the lower-income?
Some of our lower-income elderly have been questioning about the high minimum sums required in the different accounts. The low CPF Life annuity pay-outs for those with low RA balances which are not indexed for inflation may cause financial hardship, as the low pay-outs may not be enough for their basic survival needs. For such Singaporeans, why make CPF Life compulsory for them?
How many know the CPF usage risks of HDB bank loans?
Some young couples have also been asking questions about the restrictions on the use of CPF for their HDB flat (Valuation and Housing Withdrawal Limits) and children's tertiary tuition fees. (Note: New or resale HDB flats on HDB Concessionary loans (not bank loans) are not affected by these limits)
Some people in the working population have also been criticizing or have raised questions regarding CPF’s deduction policies, such as the high proportion of Workfare pay-outs that go to the CPF account instead of as cash. For the self-employed, the entire Workfare pay-outs goes to CPF, and thus does not help the disposable income cash flows of these older (age 35 and above) lower-income Singaporeans.
BY: Han Hui Hui and Leong Sze Hian
If Singapore Government’s Statutory Boards can sue Singapore citizens for defamation, you will be sued for defamation as asking question will cast doubt on the credibility and integrity of the CPF as well as the manner in which the CPF conducts its affairs and/or business, giving rise to an imputation that the CPF is dishonest and/or unethical.