We thank Dr Ho Ting Fei and Mr Lawrence Loh for their views (Make full CPF payout at age 70, Feb 23; CPF policies should be simple and logical, Feb 26).
Mr Loh asked why payouts start from the age of 65 when the statutory minimum retirement age is 62. Age 62 is not the age workers must stop work, but the age when they are re-employed. Under the law, employers have to offer workers re-employment up to 67. In practice, well over 90 per cent of eligible workers are re-employed at 62.
As a result, the employment rate of seniors has risen steadily. Today, about four in 10 seniors aged 65-69 are still working.
Manpower Minister Josephine Teo recently announced that both the retirement age and re-employment age will be raised further. However, Central Provident Fund (CPF) members will still be able to start receiving their payouts any time from 65.
Dr Ho suggested starting payouts automatically at 65.
It has been a longstanding practice for members on the Retirement Sum Scheme to decide on when they wish their payouts to begin. They can do so any time from 65. This is also the case for members who joined CPF Life from July 2015.
We do not assume every member wants to start receiving his payouts at 65. There are in fact benefits to starting later.
Members will earn more interest. For every year of deferral, members get up to 7 per cent more in payouts. That is up to 35 per cent more for five years of deferral.
Starting payouts automatically at 65 means automatically denying members these benefits.
The CPF Board sends letters to inform members of these arrangements before they reach 65. If the member does not choose to start his payouts, CPF Board will remind them every year. It is therefore possible that many CPF members who do not start payouts at 65 have made a conscious choice.
Nevertheless, some members may still not be familiar with the arrangements. The CPF Board will improve outreach, to help them exercise an informed choice when to start their payouts.
We encourage members to make an appointment online to visit any CPF service centres islandwide for personalised face-to-face advice. Members can also call the CPF Call Centre on 1800-227-1188.
Ministry of Manpower