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Option of partial lump-sum CPF withdrawals for retirees

Prime Minister Lee Hsien Loong holds up a new CPF booklet during his speech at the National Day Rally at the ITE Headquarters and College Central on Aug 17, 2014. Photo: Ooi Boon Keong

Prime Minister Lee Hsien Loong holds up a new CPF booklet during his speech at the National Day Rally at the ITE Headquarters and College Central on Aug 17, 2014. Photo: Ooi Boon Keong

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SINGAPORE — Central Provident Fund (CPF) members will have the option to withdraw part of their CPF savings in a lump sum when they need to, subject to limits, said Prime Minister Lee Hsien Loong yesterday.

The amount that can be taken out cannot be excessive — up to 20 per cent of total monies, for example — and should be withdrawn only during retirement, added Mr Lee.

“(A CPF member) must understand clearly the trade-off — if you take out a lump sum, that means you will have less left in the CPF and your monthly payments will be lower.”

Adding that this was an issue that he had been discussing with his colleagues and considering for a long time, Mr Lee said he had decided to adjust the policy.

An advisory panel will be set up to look into it and other issues, such as how the Government should adjust the Minimum Sum over time and what exact rules and limits for lump-sum withdrawal should be.

Details of the panel, which will also study how CPF members can have more flexibility in investing their CPF savings and accept more risks in the hope of higher returns, will be announced soon by the Ministry of Manpower.

“For members who prefer payouts to rise over time, because we like to be able to cope with future rises in the cost of living, how can we offer members options to do that?” said Mr Lee, pointing out that receiving larger payouts in the future would entail getting smaller initial payouts.

He noted two views on the purpose of CPF funds: Some want to be assured of a steady stream of income in their golden years, while others want to withdraw a lump sum immediately as they need money urgently.

Mr Lee said his view is that the CPF’s core purpose is to provide a steady income stream in old age, but he appreciates why some members want to take more money out.

He cited instances in which people might want to use their savings to “do something they have long wanted to do”, such as fulfilling a lifetime dream or dealing with a family emergency.

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