The Government's decision to raise the draw-down age to 65 for the Central Provident Fund's (CPF) Minimum Sum drew a chorus of opposing voices when it was announced last August, but some 75 per cent of those eligible for monthly CPF payouts have now agreed to defer receiving the disbursements.
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Of the 10,100 workers the CPF Board had contacted so far, three out of four opted for the V-bonus — an annual bonus awarded for each year that they defer withdrawing funds from their Retirement Account (RA) after they hit 62. For each year a worker defers his monthly payout after 62, he gets $600. That means the maximum one can get is $1,800, for three years' of deferment.
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The bonus scheme, which was introduced to spur workers to keep their funds in their retirement kitty until they are older, appears to have achieved its aim: About 44 per cent of some 2,400 who have started collecting payouts have also chosen to suspend the monthly withdrawals.
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The positive response to the V-bonus is "surprising", said Society of Financial Services Professionals president Leong Sze Hian. These workers could have decided to hold out on tapping their RA because of the buoyant economic climate.
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The CPF Board will send out another 105,000 letters to those aged between 56 and 58 this week to encourage them to top up their RA to $30,000 by February. Workers in this age group stand to gain a maximum one-time D-bonus of $1,500 for deferring their draw-down age to 65.
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Meanwhile, the total number of funds under the CPF Investment Scheme (CPFIS) dropped to 387 from a high of 444 at the end of 2006, as the CPF Board sought to raise the quality of these funds. Among other criteria, a fund has to belong to the top quartile in its global peer group to be admitted under the CPFIS.
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Despite imposing tough new criteria, like capping a fund's expense ratio to a cap of 1.95 per cent and the sales charge to a maximum of three per cent, the number of List A Funds — those that have met all the criteria set out — have soared to 46 now from four at the end of 2006.
