Changes to CPF allow for greater flexibility

New rules include easier money transfers to spouse's account

Central Provident Fund (CPF) members aged 55 and older will be allowed to transfer money from their accounts to that of their spouse, as long as they meet the Basic Retirement Sum.

The sum is $80,500 for those who turn 55 this year, and it will be adjusted periodically.

The change is among several amendments approved by Parliament yesterday to increase the flexibility of the retirement savings scheme, as well as to let more people make claims under two CPF insurance schemes.

Previously, people could transfer CPF savings to spouses only when they had met the Full Retirement Sum, which is twice the Basic Sum.

With the change, both spouses can have their own CPF Life plans and more secure retirement income for life, Manpower Minister Lim Swee Say said yesterday.

Also, members now need to choose their CPF Life plan only when they are eligible to start receiving payouts, instead of at age 55, which could be about 10 years earlier.

The amendments to the CPF Act also allow CPF members with terminal illnesses or total permanent disabilities - but who can still work in a diminished capacity - to make claims under the Home Protection Scheme (HPS) and Dependants' Protection Scheme (DPS).

Previously, claims could be made only when a member died or could not work again.

HPS reduces the outstanding mortgage on a Housing Board flat if these conditions are met.

To reduce the number of people who lose their HPS coverage because they and their spouse run out of savings in their CPF Ordinary Accounts to pay the premiums, other co-owners of flats, including children, parents or siblings, will be allowed to contribute to the premiums from their Ordinary Accounts.

Every year, about 4,000 to 5,000 people drop out of HPS on average, said Mr Lim.

Another change lets the CPF Board impose administrative penalties if medical institutions and approved insurers - who help to facilitate Medisave withdrawals - make wrong or unauthorised claims on CPF members' Medisave savings, or do not comply with the Board's administrative requirements.

In addition, employers can use projected wages for the current year to estimate additional wages that attract CPF contributions.

This move is to improve efficiency as employers are less likely to over-pay CPF contributions, and need to then apply for refunds.

CPF members will also be able to apply to withdraw cash payouts from various government schemes like GST vouchers, in the event the money went into their accounts because they failed to cash their cheques on time.

The existing CPF withdrawal rules do not allow this but, as Mr Lim said: "These payouts are meant to support members' daily needs.''

Ms Jessica Tan (East Coast GRC), one of the three MPs who spoke on the Bill, said there should be effective communication with members to help them better understand CPF schemes. They should also be given financial counselling.

"The irony of offering more choice in the usage of members' CPF monies is that it adds to the complexity of the scheme," she said.

Mr Pritam Singh (Aljunied GRC) and Non-Constituency MP Dennis Tan also supported the changes.

Mr Singh suggested that the CPF Board look into expanding the HPS to cover Singaporeans with pre-existing illnesses, as was done with Medishield Life.

A version of this article appeared in the print edition of The Straits Times on March 01, 2016, with the headline 'Changes to CPF allow for greater flexibility'. Print Edition | Subscribe