a community of singaporeans

CPF – F1 or F9? Half also cannot withdraw anymore

Posted by theonlinecitizen on June 25, 2007

By Leong Sze Hian

On Jan 22, 2007, the manpower minister, Dr Ng Eng Hen, was quoted by the media thus:

‘To a question if the minimum CPF sum of $90,000 would be enough for retirement, Mr Ng said changes are being made so Singaporeans can have more money when they retire. The minimum sum, for example, is gradually being increased and the 50 per cent withdrawal rule will eventually be phased out in 2009.’

According to the CPF Board’s website, the rationale for phasing out the 50 per cent withdrawal rule is as follows:

‘As Singaporeans are living longer, and having smaller families on which to rely, they will have to depend more on their CPF for their retirement. With the cut in the CPF contributions, it has become even more important for Singaporeans to ensure they have enough CPF savings for their old age.

The current withdrawal rule allows members to withdraw 50 per cent of their combined Ordinary Account and Special Account balances, even if this leaves the Retirement Account with less than $47,300 in cash. This leaves many members with insufficient CPF to see them through their retirement. Phasing out the 50 per cent withdrawal rule will help more Singaporeans set aside their CPF Minimum Sum.’

The ‘cut in the CPF contributions’ may result in some Singaporeans having even less cash at age 55, because they have to use more cash to pay off their home mortgage, children’s tertiary education tuition fees and Dependents’ Protection Scheme insurance premiums.

Currently, for those with $10,001 to $189,200 at age 55,

‘the member can withdraw up to 50 per cent of the total balance in his Special and Ordinary Accounts. The remainder will be set aside in his Retirement Account. Starting Jan 1, 2009, the 50 per cent withdrawal rule will be phased out gradually.

The percentage for withdrawal will drop to 40 per cent, and thereafter be further reduced every year by 10 percentage points until the withdrawal rule is phased out. Therefore, from Jan 1, 2013, you must meet the CPF and Medisave Minimum Sums first before you can withdraw your remaining Ordinary Account and Special Account balances at age 55.

However, you can continue to withdraw the first $5,000 from your Ordinary Account and Special Account balances. We believe this gradual phasing in will give CPF members time to make adjustments to their financial plans. The Minimum Sum will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2013, and will be adjusted yearly for inflation.’

Hence, by 2013, those with less than the Minimum Sum of $120,000 and the Medisave Required Amount of $25,000 (currently $11,500), will not be able to withdraw any CPF money.

With older workers finding it harder to keep their jobs and find new jobs, some Singaporeans may have no choice but to rely on the current 50 per cent CPF withdrawal allowed. This may cause financial stress to those affected. Consequently, I would like to suggest that the phasing out of the 50 per cent withdrawal rule be reviewed.



9 Responses to “CPF – F1 or F9? Half also cannot withdraw anymore”

  1. sarek_home said

    With the baby-boomer generation retiring and in the position to withdraw their CPF and more people are working a temp or self-employed so they don’t have CPF contribution, is CPF facing difficulties meeting its members withdrawal demands? Is the government facing difficulties in using CPF as a cheap source to fund its projects?


    Not only do CPF holders suffer low returns on their contributions, they are also left in the dark about how their savings are invested. By law, CPF monies that aren’t withdrawn by members must be invested in government bonds and deposits with the central bank. In turn, the Government of Singapore Investment Corporation (GIC) invests the funds thus raised, but does not publicly disclose its portfolio or investment performance.

    People have criticized the government for using the CPF to raise cheap funds for investment projects at the citizens’ expense. The government defends itself by claiming the investment gains are used to fund infrastructure development and provide other public amenities, which benefit all Singaporeans. Still, the average Singaporean may prefer at least having the option of receiving those gains directly.

    And funding of state/public projects should come from other sources of public revenue (like Income and Corporate Tax). By its very origin (from a workers’ personal income), CPF cannot be categorised as a source of public revenue. Therein lies the logical inconsistency.

  2. shoestring said

    What bothers me most is that the government changes the CPF contribution/withdrawal structure whenever it feels like it. And it’s a “one size fits all” kind of revamp. It appears that they are only interested in reducing the health care cost of subsidizing the old and poor, without regard to the plight of the individual and his specific circumstances. It’s too economically driven and cold.

    I wouldn’t be surprised if, when it comes to my time to retire and withdraw my money, the government introduces another new rule, e.g. you’ve got to be alone with no immediate family member to take care of you before you can withdraw your CPF.

    What about those who become ill and have no money for health care before they turn 65? They’ll probably die with their money locked up in the CPF. That’ll be the ultimate irony.

  3. CPF is the policy of the PAP. As I am no more interested in politics, I would just comment the aspect of the CPF money as an example of insurance money.
    Most people fear death and live of their kins after their death. The world is a stage, we are only actors.
    Birth and death are in control by Nature. This is all Fated. The day you are born, there is a life charted for you till you die. You cannot change your life unless you go the spiritual way.
    Insurance is against Nature. CPF is also against Nature. No matter how you try to do for the people in this manner, you cannot outwin the Nature.
    It is best for the people to control their own business, rather than the government trying to do everything for the people.
    There are people who can live on S$200 a month while there are many who still cannot survive on S$10,000 a month.
    Life is in our hand, so don’t expect the government to do everything for you. Like, you like to smoke and get lung cancer, do you expect the government to come out evry cent to support your medical fees ?

  4. shoestring said

    Kew Kah Fatt,

    The government isn’t doing much in the interest of Singaporeans when they lock up our money in the CPF, which is rightfully ours to control. It is insuring itself from irresponsible Singaporeans who spend imprudently, and the ageing population, using the peoples’ own money.

    What it is trying to do is to avoid being bogged down by welfare demands which means they will have less to spend on other areas, like foreign investments and incentives for foreign businesses and talents to set up shop/ home here. They are basically economically motivated because they apparently think money speaks louder than anything else. Which unfortunately seems to be the case in Singapore.

    So, going by your line of argument, if CPF/ insurance is against nature, then all the more, the money should be returned to us, not kept away from us, even till the day we die.

  5. Lifeslikethat said

    It is quite disconcerting to me that while singapore and singaporeans have the highest savings rate in the world, and with us being named Number 1 in this and that, our govt is also telling us that we do not have enough for retirement.

    Lim Boon Heng also says that with $200,000, it is not enough for our retirement.

    Now, any sensible and thinking person will be asking “How come?”

    Obviously, the govt has lost its way somewhere along the line – and singaporeans are bearing the brunt of it.

    Instead of admitting that they have got it wrong, they are now passing the buck to singaporeans, by asking us to work longer and “not to think about retiring”.

    The problem is, as many have said before, manifold: High cost of our HDB flats, monopolies in our basic services (transport, utilities, etc), and low returns on our CPF savings.

    Instead of looking at these, the govt now tells singaporeans to work longer.

    And even then, there is no guarantee that we will have enough when we finally retire.

    As is with the NKF – which continuously told us that they do not have enough money and accumulated something close to more than half a billion dollars in total – there is something seriously wrong with govt policies.

    But with a timid media and MPs who would rather keep their mouths shut, singaporeans will continue to be coerced by the govt into doing what they want us to do.

    In the end, it is singaporeans who will bear the brunt of such ill-conceived policies.

  6. lesile said

    We know very well that gov speak lie, damn lie and more damn lies. But still we ask, what can chicken do ?

  7. Alex Har said

    Like most Singaporeans, I am not good at these numbers…and am confused. How can we have more money when we retire when we cannot withdraw the amount the we have saved in our CPF? Are we bring duped into believing there is enough when there really isn’t.

  8. The_Censor said

    Dear Mr Leong Sze Hian, I am also trying to grapple with this CPF thing. As I see it now, we get low rates of returns but these are guaranteed returns. If we don’t like this, almost the entire amount (except Medisave) can be used for other kinds of investment (property, stocks, gold, ETFs, managed funds, etc.). On the face of it, it seems fair to me – if you don’t know what to do with your money, at least keep it safe. If you do, then you take the risk and returns. What do you think? Another thing: What happens to our CPF money if we leave it in the CPF? Is it essentially low-cost funds for the government to do what they please (like pay themselves???)

  9. Doreen said

    Dear Singaporean.

    I am the ex-singaporean. Given up to keep the citizenship for many reason. First of all, my brother advised me to take my CPF money for the past few years but telling me that Govt. keeps on changing CPF rules. At first i thought maybe i have acted irrational of giving up. Yes, i worked hard when i was lived in Singapore from the time i was born there until i was migrated to Australia with my husband as a family for the past 18 years. I never intended to give up my citizenship at all. Until my daughter was born and i constantly received news from my family the updating of the CPF. The immediate reason is very simple. I love Singapore and i have closed relationship with my family at that time and relatives. However, i discussed with my brothers about it if by any chance i am dead, who is going to benefit my CPF when i am dead, i cannot speak on behalf of my daughter. At the sametime, she will have the huge problems in dealing with PAP singapore Govtn. Firstly, she is Dual citizen of Australia and England. We did apply for her to have PR of singapore but was hammered down by the Singapore Govt. Finally, we given up to argue the case. We all live in Australia from 1989 since and we all earn our living here and our daughter has just finished her A’Level education and going to study Uni 2008 in Australia UWA Uni. Yes, i realised that my decision which i have made was not irrational until i heard about CPF changes in latest news. I felt sorry for my brothers and sisters in Singapore. I used to complain about higher taxes which i have to pay in australia out of my paypacket so far. Right now, i dont think so? What is the point of saving up and control by the Govtn about our life saving (CPF) and telling us that we all cannot be withdrawn and if we live until 85 or onwards. Well, becoming reckless as it becomes. I felt sorry for all my fellow Singaporean about this changes.

    PAP has been doing goods to Singapore in the past. Yes, good team and created a prosperity country like Singapore. After LKY stepped down to be offical in charge and passing the status to his son and his daughter-in-law about this Temask Inc. etc. costing all Singaporean big bucks. That why CPF fund is not going to be enough for those who will retire at the age of 65 for men and 62 for women.

    Singapore has set up CPF fund and policy since early 70’s and compare to Australia, and right now, PAP telling the whole wide world that Singaporean are going to face Old AGE Retirement problems.

    Will be better for the Govtn to say to all Singaporean that all your CPF is controlled by them and there will be no policy and Act so far and it is up to Govtn to return those funds depending whether we can fix up our Bookkeeping. I feel shame of the Govt. so far. Why ruin Singaporean trust and royalty. What about those who are PR and expirates etc who laugh all the way how rude to Govt treats their own Singapore. My dad had passed away if not, he is going to say, Blood sucking paradise Govt. Getting reckless as it becomes.

    I have relatives who have closed ties with PAP members for the past 25 years. I have not heard what he/she is going to say about this Govt. Yes, feeling sick about CPF changes, relunctanly to vist Singapore. Destory the good image of the Govt. The honest advice to people in the world never trust any Govtn. It is best to look after your own money if possible. Dont ever think about CPF funds as you might not see it or enjoy it at all. Same to be i work in Australia and i have my monthly contribution of Superannuation Scheme from my Employer and not from my part because all these funds is controlled by Govtn and it is up to them to tell us when we can see our money or etc. I paid my taxes which i cannot escape at all and i am sitting on my part waiting for the govtn to pay me a pension when i reach 62 years of age. of course, at the meantime, i am saving up my money for my own retirement instead of depending on the govtn to look after me. If the Govtn cannot balance their books, social welfare, etc, will be cut on ordinary citizens but not to politicans who we vote for them on the compulsory laws within each countries. Right now, look at Singapore govt. and Australia Govtn, they all are the same. Politicians salaries keep going up and up. Aprox. 16 to 24 % at least. We work hard and asking for pay rise , they keep on saying that the cost of labour is too high. Why not, politicans cut their wages and set up a Act or Policy for us as Citizen to say yes, we only allow certain Wages rise and not they put their hands on us pocket. Politicans look after themselves over not for ordinay people like us. All is about greed, power and show off. Look at Singapore, low wages for elderly workers. What a shame to the Govt. Elderly needs more money to look after themselves than the young generation. Govt. dont value elderly people in the work force. I am sad to see 70 to 80 years old man or woman working in the fast food chain to earn money to survive. I wish i can do something to help them. Talk about S$200 or S$300/- a month for them to survive. Tell LKY or Goh C. Tong to survive on S$200 or S$300/- a month.

    Singapore Govt becoming so cruel towards the elderly. Not doubt, i have no right to be a single little bean to raise my issue but i completely shocked about the changes about CPF. I am sorry for my relatives in Singapore. Yes,pray hard that their children must have brain and genius to look what is going to happen to Singapore another 20 to 30 years from now.

    Singapore Govtn! pls touch your heart and souls in looking after Singaporean future. Well,we cant pay for those who live until 85 and never have anything in their lives. Those who live until 85 and no saving , well, parent maintenance bills will fix this problems. Why should the original Singaporean working so hard to meet their needs day and night and months and years have to pay for someone who never plan and save in their life time and expected those who work hard to pay on behalf of them.

    Politicans can look after those who are living 85 and beyond becs they have huge wages and benefits from the time they join the PAP party.

    I am checking on the net more often since the changes of CPF. I am worried about beloved brothers, sisters and all nephews and nieces etc.

    Not to interfere Singapore Govt. policy but like to raise my issues. Hear Me out Singapore Govtn.- PAP!

    Lets pray that PAP will change the policy that it is fair and justice to all Singaporean. Why should i care since i am no more have the citizenship. I am the ex-singaporean who i will always remember that Singaporean can survive any where if we will give any opportunities. We are all hard working Singaporean who we all have become from such a small island. We all have brains and souls to make the difference and our determination and goals we have carried from the past. Yes, without PAP govtn restored the small island, i will not be in Australia persusing my career and family. I acknoledged that PAP govtn did a good job so far.

    Hear me out ! PAP, LKY and Goh Chok Tong. Please touch your souls.

    I told my husband about the CPF changes and live 85 beyond etc. He said that not many will live past 85 very small percentage etc. What is the point for the CPF if the CPF cannot be drawn at all. And the rules and policies keep on changes. Well, it seems that i am lucky to hear from my brother to give up Citizenship and have my CPF funds and look after my hard earn money to avoid Singapore Govtn changes and questioning.

    Lets pray!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: