Based on CPF’s Retirement and Health Study 2019/2018, 1 in 4 Singaporean residents would be aged 65 years old and above. As we face an ageing population, it is increasingly important for us to be educated on how CPF can support our retirement adequacy needs.
However, mention Central Provident Fund (CPF) at a coffee shop or in a taxi and you could be bombarded by opinions of people around you. Often, there are some opinions containing misinformation on how CPF works as a national retirement savings scheme. This hearsay can be harmful and impedes our retirement planning.
Among popular CPF topics, here are the 3 common CPF myths that we might have heard in Singapore and the truth behind them.
#1 Our CPF Savings Will Go To The Government When We Pass Away
When we pass on, our CPF savings go directly to our nominated CPF beneficiaries, if we have made a nomination. If we have nominated our loved ones via the CPF Nomination Scheme, they would be contacted within 15 working days after our passing, on the procedure to receive the CPF savings. For those of us who have not made our nominations, we can do it online here.
If we did not make any nomination or if our nominee is below the legal age of 18 years old, our CPF savings will be transferred and held by the Public Trustee. The transfer can take about 4 to 6 weeks before the Public Trustee distributes it according to Intestate Succession Act. Our loved ones can make claims for our CPF from Public Trustee by making an online application here.
Do note that CPF savings are excluded from our estate, hence they cannot be distributed by our Will. By excluding CPF from our estate, the CPF savings are protected for our loved ones as creditors (if any) cannot have a claim over it.
Regardless, the CPF savings that can be inherited is only limited to the savings that we have. In the event that our CPF accounts are empty, there will not be any inheritance made.
#2 Our CPF Savings Will Be Locked-In Until 65
This myth is untrue as when we turn 55, we can withdraw $5,000 from our Special Account (SA) and Ordinary Account (OA), even if we do not meet our cohort’s Full Retirement Sum (FRS) or Basic Retirement Sum (BRS).
In addition, excess CPF funds in our SA and OA can be withdrawn if we hit our FRS requirement or BRS requirement after pledging our HDB. More about these scenarios can be found in this article – How Much Can You Withdraw From Your CPF At Age 55?
#3 We Need Pay Back CPF In Cash If The Sales Proceeds From Selling Our House Is Not Enough
As CPF is a national savings scheme meant for retirement, when we use it to finance our housing loans, we are “borrowing” from our retirement savings. Therefore, when we sell our houses, we are required to return to CPF the amount we borrowed along with accrued interest.
In the event, we sold our house at market value and there is a shortfall on the sales proceeds, we are not required to top up any additional funds in cash. All the sales proceeds would go towards paying for our remaining home loans and CPF. Once the funds returned to CPF, we can still proceed to purchase another home using our CPF OA funds.
However, in the rare circumstance where we sold our house below market value and there is a shortfall in sales proceeds (where the selling price is below both the valuation and the purchase price), we are required to top-up the shortfall in the CPF refund of principal and accrued interest in cash.
Stop The Spread Of CPF Misinformation With CPF Volunteering (CPFV)
Misinformation is an issue that has plagued CPF ever since the beginning. While the intricacy and complexity of the scheme is intended to help secure the retirement of Singaporeans, the scheme itself is not well-understood by most people.
To curb the spread of misinformation, CPF has increased its people engagement by sharing more information on the various schemes on various online and social media platforms. Additionally, CPF has recently launched the CPF Volunteering (CPFV) app which is a volunteer-based movement to share tips on CPF and debunk myths.
Source: CPF App Store
Through a gamified experience, users can accumulate points and interact with other users in the comments on the various bite-sized information on CPF. The app also provides the user with the ability to share this important CPF information easily with videos and graphics.
As a newly launched app, CPF will be hosting “The CPF Seasonal Event” from 28 April to 31 May 2021. The first 4 challenges are already released, and the next 3 challenges will begin on 17 May 2021. The top 100 participants of the event will get a chance to win prizes from Universal Studios, S.E.A Aquarium and Shopee.
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