Using CPF to pay for housing and insurance after age 55

CPF savings are important not just for your housing needs, but also your retirement needs.
CPF savings are important not just for your housing needs, but also your retirement needs. ST PHOTO: FELINE LIM

Central Provident Fund (CPF) members can continue to use the remaining savings in their Ordinary Account (OA), including future working contributions, to pay for their outstanding housing loans.

USING CPF FOR HOUSING REPAYMENTS AFTER AGE 55

It is prudent to consider if you need to apply to reserve some OA savings for this purpose, before the savings are transferred to your Retirement Account (RA).

However, this means that you will be setting aside a lower retirement sum. As a result, your monthly payouts will also be lower.

Note that the employer and employee CPF contributions to the OA will be lower, and this may affect how you manage your housing loan payments. So, if possible, try to pay off your housing loan by the time you turn 55.

 

You can also use your RA savings (excluding top-up monies, interest earned, and any government grants received) above your Basic Retirement Sum for your housing needs.

WHAT HAPPENS IF I SELL MY PROPERTY AFTER I TURN 55?

CPF savings are important not just for your housing needs, but also your retirement needs.

To ensure you have enough savings for your retirement, when you sell or transfer your property, the amount you have withdrawn from your CPF account to pay for the property, as well as the accrued interest you would have earned on the sum, will have to be refunded to your CPF account.

If you had also withdrawn from your RA by pledging your property, you need to refund the pledged amount too. The amount refunded will then be used to restore your RA up to your Full Retirement Sum, so that you can get higher monthly payouts in retirement. The balance of the housing refunds will then be paid to you.

If you own an HDB flat, you can generate income from it for your retirement needs by taking one of these three options:

•Move to a smaller flat or short-lease a two-room Flexi flat and sign up for the Silver Housing Bonus to get a cash bonus when you top up your RA.

•Sign up for the Lease Buyback Scheme and top up your RA to get a cash bonus.

•Rent out your flat or room(s).

WHAT ABOUT MY INSURANCE PREMIUMS?

You can continue to use your OA savings for insurance premiums under the Home Protection Scheme and the Dependants' Protection Scheme, after setting aside your retirement sum at age 55.

However, if you do not have enough savings in your OA, it would be advisable to ensure that you have alternative funding, such as relying on cash payments instead of your CPF savings. This is to avoid the undesirable situation where your insurance plans lapse, because there are insufficient CPF savings for premium deductions.

Lorna Tan

A version of this article appeared in the print edition of The Sunday Times on April 09, 2017, with the headline 'Using CPF to pay for housing and insurance after age 55'. Print Edition | Subscribe