CPF issue: Only one in 10 use CPF for housing after 55; flexibility given in using RA savings

CPF issue: Only one in 10 use CPF for housing after 55; flexibility given in using RA savings

SINGAPORE - Of the Central Provident Fund members aged 55 and above, only one in 10 are still using their CPF to pay their monthly instalments for housing, and only one in 20 may have to use some cash for their instalments, Manpower Minister Tan Chuan-Jin said in Parliament on Tuesday.


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Excerpt from Manpower Minister Tan Chuan-Jin's speech:

Flexibility within Minimum Sum Rules

"Ms Tin Pei Ling asked whether a more flexible use of CPF savings for housing can be allowed. Mr Seng Han Thong specifically asked whether more flexibility could be exercised for members with less than half the Minimum Sum. Ms Irene Ng asked whether it can be made automatic for these members to continue using their CPF for their housing loans without interruption.

"I understand that there are concerns about CPF members' ability to continue servicing their housing loans with CPF savings after 55. Let me first state that in the 10 cohorts aged 55 and above, only 1 in 10 are still using their CPF for monthly instalments, and only 1 in 20 may have to meet their monthly instalments with some cash.

"For CPF members who do face difficulties with their housing loan repayments, we have exercised flexibility where a case merits it and allowed them to use part of their Retirement Account savings for housing even if they do not have half the Minimum Sum.

"I have shared before with Members of the House that we receive an average of about 500 appeals annually from members 55 years and older who request to use more Retirement Account savings for housing, and we approve about two-thirds of the appeals.

"The number of such appeals is not large, considering that there are more than 60,000 CPF members turning 55 every year. For cases that are not approved, we also work closely with HDB to explore alternative financing or housing options for the CPF member.

"I would like to re-assure Mr Seng that we are ready to exercise flexibility in the use of CPF for housing after 55 because we recognise that helping a member maintain a roof over their heads is an important part of our overall retirement adequacy goals. But to address Ms Irene Ng's point, I don't think we want to make it automatic for members, because some of these members would be able to service their housing loans using cash, instead of drawing upon their Retirement Account savings and hence compromising the monthly payout in retirement.

"We also do not want to encourage rash and imprudent housing purchases by members who think that they can automatically draw down fully on their Retirement Account funds to service their loans. You could end up with over-consumption on housing as a result of that, and members can get over-stretched.

"Mr Ang Wei Neng raised a separate point on whether we can remind CPF members at age 54 about the impending transfer of members' monies from their Ordinary Account to the Retirement Account when they turn 55. Currently, CPFB informs members 2 months before they turn 55.

"Since January this year, HDB has been sending letters to households with outstanding HDB loans and with at least one HDB lessee age 50 to 54, to remind them to plan ahead for their housing payment before 55. Nonetheless, I think more can be done in this area and Mr Ang's suggestion is a good one. We will look into how CPF members can be reminded to make sufficient arrangements for their housing payment in advance."

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