New CPF Changes in 2010

From 2013, CPF mem­bers born in 1958 or later with at least $40,000 in their Retire­ment Account (RA) at age 55 will be auto­mat­ic­ally included in CPF LIFE. Those with less than $40,000 will not be auto­mat­ic­ally included at 55. How­ever, such mem­bers will be auto­mat­ic­ally included at DDA if they have $60,000 in their RA then. This $60,000 is equi­val­ent in value to $40,000 at age 55, com­poun­ded at 4% over 10 years.

CPF SA Amount for Invest­ment
From 1 July 2010, the first $40,000 of mem­bers’ Spe­cial Account bal­ances will no longer be allowed to be used for invest­ments. There is no change to the require­ment for mem­bers to set aside $20,000 in the Ordin­ary Account before they can invest their Ordin­ary Account mon­ies. This move is to ensure that CPF mem­bers has the $60,000 when they reach 55 years old to receive reas­on­able monthly pay­out.

Refin­ing CPF Nom­in­a­tion Rules
From Janu­ary 2011, CPF mem­bers will be allowed to trans­fer their CPF mon­ies to their nom­in­ees’ CPF accounts upon their demise. This will bet­ter provide for the retire­ment and health­care adequa­cies of their nom­in­ees. CPF Board will release more details at a later date.  

Allow­ing Pay­out Adjust­ments for Min­im­um Sum Scheme
From July 2010, mem­bers can now apply for an upward adjust­ment in their CPF monthly income provided that their adjus­ted pay­outs can last at least 20 years from their Draw Down Age, or at least anoth­er 5 years from the time of applic­a­tion, whichever ends later. This option is applic­able to both MS top-up recip­i­ents and older mem­bers with large bal­ances in their Retire­ment Accounts.

Example of Min­im­um Sum Pay­out Adjust­ment: Mem­ber aged 64 in July 2010

Cohort Draw Down Age 62
Retire­ment Account cash bal­ance $95,000
Top-up amount in July 2010 $22,000
Retire­ment Account cash bal­ance after top-up $117,000
Under Cur­rent Top-Up Rules
Pay­out $537*
Estim­ated pay­out end age 96
If Mem­ber Opts for Upward Pay­out Adjust­ment
Re-com­puted pay­out $754
Incre­ment in pay­out $217
Estim­ated pay­out end age 82

* This is the max­im­um pay­out for this member’s cohort under cur­rent top-up rules


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