SINGAPORE - Various rules around the Central Provident Fund (CPF) will be streamlined and simplified to make it easier for members to receive their retirement payouts and build their nest egg.
Among other changes, the new CPF rules will ensure that people on the Retirement Sum Scheme automatically continue to receive payouts from their Ordinary and Special accounts savings when their Retirement Account savings are used up.
Currently, they have to apply to transfer monies in their Ordinary Account and Special Account to their Retirement Account when the Retirement Account funds are depleted.
Manpower Minister Tan See Leng outlined these measures during a debate on changes to the CPF Act in Parliament on Monday (Nov 1).
There are more than 250,000 members currently receiving payouts under the Retirement Sum Scheme and these are people who have not opted for CPF Life.
Dr Tan said: "Under this scheme, members stop receiving payouts once their Retirement Account is depleted. However, many members still have funds in their Ordinary or Special account, because they continue to receive CPF inflows such as contributions from employment.
"Some members are not aware they can transfer these funds into their Retirement Account, and continue to receive a monthly payout. With this amendment, we will make it easier for them."
Some 83,000 people on the scheme stand to benefit from this change, from the first quarter of next year.
For the 75,000 CPF Life members who have started getting payouts, the change also means that inflows from their Retirement Account will automatically be used to boost their CPF Life payouts.
Dr Tan said: "These changes will make it easier for members to tap their CPF savings."
In addition, those turning 65 from 2023 have the flexibility to decide when to transfer the savings in their Ordinary and Special accounts to the Retirement Account, from January 2023.
Currently, the transfer occurs once the person is eligible to start receiving the payouts.
But there is no change to the current rules for lump sum withdrawal of CPF savings.
The other amendments also aim to simplify some existing rules, such as providing tax relief to the givers instead of recipients, when top ups are made under the Voluntary Contributions to MediSave Account scheme.
There will also be a higher tax relief cap of $8,000, for both this scheme and the Retirement Sum Topping-Up initiative combined.
These changes cut down on the number of different rules to follow for the two different schemes, making it simpler for people.
Furthermore, the period that CPF money is retained after a person dies will be shortened to six months, from the current duration that can go up to seven years. This change will kick in from April next year.
"This is in line with ongoing efforts to disburse such assets more quickly," Dr Tan said.
He noted that over the years, the CPF Board has continuously relaxed the qualifying criteria to allow more nominees to receive their bequeathed money without applying for it, which can be particularly helpful for those who need to tap the money to defray post-mortem expenses.
As of this year, there is no longer any threshold for the amount of nominated money that can be automatically disbursed.
Discounted Singtel shares will also be liquidated six weeks after a member's death under the new rules.
Separately, a technical update to the rules also allows the Government to recover its grants in cases where an eligible CPF member automatically receives a grant, but later chooses not to continue meeting the eligibility criteria.
Dr Tan said: "This is to be fair to the majority of other members who maintain their eligibility."