More flexibility in CPF withdrawal and retirement sum

CPF Advis­ory Pan­el that was set up in Septem­ber 2014 has just released the part 1 of their recom­mend­a­tion on CPF changes. These changes are likely to take place in 2016 as all fig­ures stated are in 2016 dol­lars.

CPF Retire­ment Sum
There will be 3 tiers of retire­ment sum that a CPF mem­ber can set aside. The first basic tier is called the Basic Retire­ment Sum, $80,500 in 2016. Mem­ber will expect to get $650 to $700 monthly pay­outs from age 65 onwards for life. How­ever, this tier only applies to house own­er who has pledged his prop­erty. There­fore, if the mem­ber sells his prop­erty, the amount of the pledge will be returned to his CPF to sup­ple­ment his basic pay­out, par­tic­u­larly if he now needs to pay rent on his accom­mod­a­tion.

CPF Mem­ber who does not own his home should set aside the Full Retire­ment Sum at two times the BRS, or $161,000 in 2016. This will trans­late to $1200 to $1300 monthly pay­outs from age 65 onwards.

For those who wish to get high­er pay­outs dur­ing their retire­ment, they can set aside Enhanced Retire­ment Sum of $241,500, which is three times the Basic Retire­ment Sum. The estim­ated monthly pay­out will be between $1750 and $1900. CPF mem­ber can do so by top­ping up his retire­ment account with his CPF sav­ings or cash.

From 2017, the Basic Retire­ment Sum will increase at 3% p.a. till 2020 to factor in infla­tion and high­er cost of liv­ing.

CPF Lump Sum With­draw­al

CPF mem­ber will now be allowed to with­draw 20% of their Retire­ment Account Sav­ings at the Pay­out Eli­gib­il­ity Age, pre­vi­ously known as Draw­down Age.  This with­draw­al amount includes the $5000 they were eli­gible to with­draw from age 55.

CPF mem­ber can also delay the Pay­out Eli­gib­il­ity Age till 70, and to expect to get 6% to 7% more monthly pay­outs for each year deferred.

CPF mem­ber can also trans­fer amounts in excess of the Basic Retire­ment Sum of $80,500 to his fam­ily member’s Spe­cial Account or Retire­ment Account. This is espe­cially import­ant for a house­wife who has low CPF sav­ings and thus depend­ent on her hus­band CPF Life pay­outs, as women tend to out­live their hus­bands.

The CPF Advis­ory Pan­el will con­tin­ue its stud­ies on altern­at­ive private invest­ments and annu­it­ies and intro­duce a CPF LIFE plan with an escal­at­ing pay­out struc­ture. The recom­mend­a­tion is expec­ted to be ready by mid-2015.

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