Minister of Manpower Tan Chuan Jin said in Parliament today that the new guidelines allowing Central Provident Fund (CPF) account holders to withdraw 20 per cent of their retirement savings after their 65th birthday do not apply to members who turned 55 before the year 2013. This is because the withdrawal rules for these older cohorts were already more generous.
Mr Tan was responding to a question by Member of Parliament Lee Bee Wah. He reminded Singaporeans that CPF members turning 55 in 2008 and earlier had already been allowed to withdraw 50 per cent of their savings in a lump sum at the age of 55.
“It would be excessive to now allow these cohorts to withdraw an additional 20 per cent of their retirement savings in a lump sum at 65,” he said. “Doing so would mean there would be too little left behind in the Retirement Accounts to provide a meaningful payout in retirement.”
“We tightened the withdrawal rules from 2009 to 2013 to ensure members had sufficient savings set aside for retirement. The withdrawable amount was gradually reduced such that from 2013, CPF members who turned 55 with less than the Minimum Sum and did not have property to pledge, could only withdraw the first S$5,000 in their CPF accounts.“
He added: “Most of the CPF changes announced at the Budget/Committee of Supply (COS) this year will apply to new cohorts turning 55 from 2016. In the case of the withdrawal rules, we have allowed cohorts who turned 55 from 2013 to benefit because these cohorts were affected by the tightening of the withdrawal rules.”
“For the cohort who turned 55 in 2012 or, in other words, those aged 58 this year, we will allow a withdrawal of 10 per cent of their Retirement Account savings at 65, since they were only allowed to withdraw 10 per cent of their savings from 55. All older members aged 59 and older would already have been allowed to withdraw 20 per cent or more of their CPF savings in a lump sum from the age of 55.”
In response to a request by NCMP Gerald Giam, Tan also revealed in Parliament how many CPF members have successfully applied for withdrawals under the Medical Grounds Scheme since 2007. About 66% of applications received between 2007 and 2014 for the Medical Grounds Scheme were successful – the remaining were rejected because they were unable to provide the required certification from approved doctors.
The scheme – first introduced in July 2006 – is based on four grounds of qualification. First, members who wish to apply have to have their medical conditions certified by a public institution or the CPF Board’s own panel, he said.
Members who are terminally will be able to withdraw their retirement savings in full, while members who are permanently incapacitated from ever resuming employment, suffer from an unsound mind or have a severely reduced lifespan, will be able to withdraw their retirement savings after setting aside a reduced Retirement Sum at the point the application is granted.