More Central Provident Fund (CPF) members can contribute to the retirement savings of their parents and grandparents, under a new CPF Act passed in Parliament yesterday.
With the change, the new minimum savings they must have before they can make such contributions will include the properties they bought using their CPF savings. Previously, the calculation of the minimum savings amount did not include such properties.
With the change, 30 per cent of CPF members aged 30 to 70 will be eligible to transfer their excess savings to their parents and grandparents, compared with about 20 per cent now. This means 340,000 more members will be eligible.
Second Minister for Manpower Josephine Teo said during the debate on the changes that the move "will give members more options to strengthen their parents' and grandparents' retirement adequacy".
Four MPs spoke at the debate on the changes. Mr Patrick Tay (West Coast GRC) asked whether Singaporeans are saving enough for retirement, Mr Gan Thiam Poh (Ang Mo Kio GRC) wanted greater flexibility for spouses to transfer their savings to each other, while Mr Louis Ng (Nee Soon GRC) suggested tax reliefs to encourage CPF members to transfer their excess savings to their family members.
Mrs Teo, in her reply, said more Singaporeans are meeting their retirement needs from CPF savings, and the latest move will encourage younger Singaporeans who have met their own retirement needs to help their older family members.
She added that it is already easier for spouses to transfer their CPF savings to each other than to make the transfer between family members.
In rejecting the idea of additional tax reliefs for such CPF transfers, she said: "CPF contributions are already tax deductible, and interest earned on the contributions are not taxable. Hence, CPF monies transferred from one member's account to another already enjoy tax relief."
Workers' Party MP Png Eng Huat (Hougang) asked if CPF officers will advise members who turn 55 to withdraw money from their CPF accounts and then top up those of their loved ones, instead of transferring the savings directly. In doing so, they can enjoy tax reliefs.
Mrs Teo said staff of the CPF Board will advise those who want to make the transfers accordingly.
She noted that Mr Png's tax relief suggestion will not benefit those who are not working, since these CPF members are no longer earning an income and "a tax relief means nothing to them".