CPF changes that you probably don’t know??

We would like to thank Sgcynic for his message alerting us to something in the CPF web site which we have never seen before.

No cash withdrawal unless both CPF and Medisave Minimum Sums are met?

“On or after 1 Jan 2013
Cash balances can only be withdrawn after setting aside both the CPF Minimum Sum and Medisave Minimum Sum”

Minimum Sum has effectively been raised to $198,500?

– This effectively raises the Minimum Sum to $198,500 (Minimum Sum $155,000 plus Medisave Minimum Sum $43,500), instead of what most people know – just the CPF Minimum Sum of $155,000 currently.

Was policy change announced?

In the past, only those who were able to meet the CPF Minimum Sum in full at age 55, were required to also meet the Medisave Required Amount. When was this change announced to the public or in the media, although we know now that it has been effective since 1 January 2013?

All the statistics given need to be revised?

So, does it mean that all the replies in Parliament recently, as well as the Institute of Policy Studies (IPS) CPF Forum on 22 July, may need to be revised, as we understand that all the statistics given for those able to meet the Minimum Sum, do not include the Medisave Minimum Sum of $43,500?

Only 1 in 10 met Minimum Sums?

Based on this new information, we now estimate that only about 1 in 10 Singaporeans who reached 55 last year were able to meet the combined Minimum Sums of $198,500 in cash, without pledging property.

Withdrawals after 55 must top-up Minimum Sums’ shortfall first?

“Q: What is the amount that I can withdraw from my CPF account at my next withdrawal if I have made a withdrawal at 55?

A: For your next withdrawal, you can withdraw your cash balances in your Special Account and/or Ordinary Account, as well as any balance above the Medisave Minimum Sum (MMS) prevailing at the time of withdrawal in your Medisave Account (MA).

When you withdraw, you will need to set aside the CPF Minimum Sum (MS) in your Retirement Account.

However, if you have a MS shortfall, all or part of your new contributions, voluntary contributions, government top-ups and other refunds received after 55 will be used to reduce the shortfall upon your withdrawals.

Increasing MMS must also be topped-up?

If you have met the CPF MS requirement and do not have the MMS, you need to top up your MA with all or part of the balances from your Special Account and Ordinary Account to meet the MMS prevailing at the time of withdrawal.”

Increasing MMS apply no matter when you turned 55?

– “Medisave Minimum Sum (MMS) prevailing” means that no matter when you had reached 55, as the MMS increases every year, it will also apply to you. In other words, the Minimum Sums has become effectively, an ever increasing sum, and not fixed at age 55 like in the past.

Govt top-ups, workfare also eaten up?

Also, any funds that go into your CPF accounts after 55, even those from Government top-ups, Workfare, etc – will have to meet any Minimum Sum shortfall as well as the increasing prevailing MMS.

Maybe no more withdrawals for your future birthdays?

Bottom line – you may not be able to withdraw anything on each of your birthdays as you grow older, like in the past, because of this policy change.

Was this change announced to the public or in the media?

You know or don’t know?

We bet many of you didn’t know about the above – right?

S Y Lee and Leong Sze Hian

P.S. Come with your family and friends to the 3rd Return Our CPF – HDB protest on 23 August 4 pm to 6.30 pm at Speakers’ Corner https://www.facebook.com/events/648543138548193/

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.