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More Singaporeans will be able to make CPF transfers to parents, grandparents from Q4 2018

SINGAPORE — From the fourth quarter of next year, more Singaporeans will be able to help their parents and grandparents save for retirement via Central Provident Fund (CPF) transfers, after changes were passed in Parliament on Monday (Nov 6).

More Singaporeans will be able to help their parents and grandparents save for retirement through Central Provident Fund (CPF) transfers. TODAY file photo

More Singaporeans will be able to help their parents and grandparents save for retirement through Central Provident Fund (CPF) transfers. TODAY file photo

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SINGAPORE — From the fourth quarter of next year, more Singaporeans will be able to help their parents and grandparents save for retirement via Central Provident Fund (CPF) transfers, after changes were passed in Parliament on Monday (Nov 6).

CPF members will be able to transfer their savings to their elders as long as they have the required Basic Retirement Sum (currently S$83,000) in their own accounts and a sufficient property pledge or charge to make up the rest of the full sum.

The amendments to the CPF Act mean about 340,000 more people (or 10 per cent of CPF members) will be eligible to make the transfers, said Second Minister for Manpower Josephine Teo during the debate on the amendments. Currently, the number stands at about 20 per cent of CPF members aged between 30 and 70.

Noting that retirement adequacy has been “improving for every successive cohort”, Mrs Teo said the authorities expect seven in 10 active CPF members who turn 55 in 2020 to be able to meet their cohort’s Basic Retirement Sum — up from six in 10 in 2013.

“In particular, (this amendment) will help members who want to increase their parents’ or grandparents’ retirement savings but may not be able to do so through cash top-ups,” she added.

Currently, those aged below 55 need to have the Full Retirement Sum of at least S$166,000 in their accounts, before they are able to transfer their Ordinary Account savings to their parents and grandparents. Property charges were not taken into consideration.

Members of Parliament (MPs) asked if the concession could be extended to parents-in-law, grandparents-in-law and family members with special needs.

Mrs Teo said those who wish to do so for their in-laws may approach the CPF Board, which will consider their requests individually, she said.

There is a need to “strike a balance” between protecting a CPF member’s own retirement adequacy and enabling him to support his elders, she said.

In response to a query from Mr Patrick Tay (West Coast GRC), Mrs Teo said recipients of CPF transfers will retain the monies even if the property used as a pledge to meet the Full Retirement Sum is eventually sold.

Changes passed will also allow members to apply to be exempted from setting aside the Full Retirement Sum if their own private insurance or pension schemes pay out the same amount as what they would receive under CPF Life, an annuity scheme which provides lifelong monthly payouts from age 65. This is expected to take effect in the first quarter of next year.

MPs like Mr Tay, Mr Louis Ng (Nee Soon) and Mr Png Eng Huat (Hougang) also called for greater outreach efforts to help members navigate the CPF system and understand the advantages of each option available.

“There is general lack of understanding of the CPF system and its policies amongst the general public. While having greater flexibility is laudable, it also introduces more complexity,” said Mr Ng.

Mrs Teo said the CPF Board has stepped up its engagement efforts and will continue to do so through road shows, talks, mobile services centres and an in-person consultation service for all members who have turned 54.

Last year, the threshold for making CPF transfers to spouses was lowered, allowing members aged 55 and above to transfer savings to their spouses as long as they had set aside the Basic Retirement Sum.

 

 

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