More seniors to benefit as 3 local banks recognise CPF Life payouts as income proof for credit card applications

More seniors aged 65 and above will be able to apply for credit cards as DBS, UOB and OCBC will recognise CPF Life payouts as income proof.

According to a statement on Tuesday (June 10), DBS said that the policy kicks in from June 11 (Wednesday).

The move follows the Monetary Authority of Singapore's recent confirmation that banks can consider CPF Life payouts as a valid source of income for retirees above 65 years old interested in applying for unsecured loan facilities, such as credit cards.

OCBC Bank will similarly allow seniors aged 65 and above applying for any OCBC credit cards to use CPF Life payouts as income proof beginning June 11, reported The Straits Times (ST).

"DBS’ official and clear recognition of CPF Life payouts acknowledges these monthly payouts as reliable, lifelong income, giving seniors fairer access to credit options that may have previously been out of reach," the bank said, adding that CPF Life payouts are now on par with other typical income proofs.

"We hope this announcement puts to ease any concerns seniors may have about getting access to credit even after they have stopped working," Joseph Wong, managing director of consumer credit risk management at OCBC said, adding that the number of seniors applying for credit cards in generally low. 

UOB said it will begin recognising CPF Life payouts as income proof for seniors in the "near future", though a date has not been set.

Prior to this, banks would assess income for credit card applications based on salary, rental and investment earnings, while CPF Life payouts were only accepted on a discretionary basis, making it harder for retired seniors to get approval for their applications.

The new policy complements findings from a recent DBS study that showed how CPF payouts cover more than half of retirees' expenses, and contributes to the bank's efforts to address the needs of Singapore's ageing population.

"By recognising the payouts as income, we’re making sure seniors continue to have fair access to credit and the cards’ accompanying privileges," said Calvin Ong, Head of Consumer Banking Group at DBS.

More retirees will be able to benefit from the perks offered by UOB credit cards as they enjoy the fruits of their labour following retirement, Jacquelyn Tan, UOB’s head of group personal financial services, told ST.

In April, a 64-year-old wrote in to The Straits Times' forum sharing his experience of being denied a credit card from a local bank despite providing ample proof of income. 

At the time, he submitted a CPF statement showing that he had exceeded the Enhanced Retirement Sum of $426,000, indicating that he would receive a CPF payout of over $3,000 monthly once he turns 65. 

The bank denied his application, asking him to provide a bank statement with a cash balance of $750,000 instead.

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dana.leong@asiaone.com