CPF Withdrawal Limit for Housing

Mr Gan Thiam Poh asked the Deputy Prime Minister and Minister for Manpower in view of the new HDB schemes such as the Lease Buyback Scheme which ensure the topping up of minimum sum of CPF accounts for older Singaporeans, whether the CPF Board will review the CPF withdrawal limit for housing so that low-income older members can continue using their CPF balance instead of cash to make monthly mortgage repayments even if they do not have the required minimum sum in their CPF accounts.

BG [NS] Tan Chuan-Jin (for the Deputy Prime Minister and the Minister for Manpower): Mr Speaker, Sir. The first and primary purpose of the CPF is to provide for Singaporeans' retirement. While members also tap on their CPF savings for housing needs, they have to do so prudently so that their retirement needs are not compromised. The Valuation Limit (VL) helps to ensure this, by limiting the amount of CPF savings a member may use for his property, to lower the purchase price or the value of the property at the time of purchase. The VL essentially discourages members from over-extending themselves in the property purchase, as they will have to use cash to pay the remaining housing loan when the VL is reached.

A member would first need to set aside the Minimum Sum cash component in his CPF account if he wishes to use more than the VL for his monthly mortgage repayment, to ensure that he has at least some level of cash savings available for retirement. This cash component is currently half of the Minimum Sum.

Mr Gan highlighted that CPF members are able to supplement their retirement income by monetising their housing asset, and schemes like the Silver Housing Bonus (SHB) and enhanced Lease Buyback Scheme (LBS) will help support this. Subletting, moving to a smaller flat, or the LBS are important options. But they may not be preferred by everyone. There will be those who are uncomfortable living with a stranger, as well as those who prefer to stay with the home they are familiar with and eventually hope to bequeath to their children.

While property is an important part of one's retirement portfolio, it remains most important to still have retirement savings in cash. The VL is therefore an important safeguard to ensure that members have sufficient cash savings in their CPF account for their retirement, even as we make available the CPF for members to use for housing needs.

I wish to assure the House that the number of members who can no longer use CPF savings to pay for monthly instalments after reaching the VL is actually very small. The VL is not a constraint for the vast majority of members who are servicing their housing loans using CPF savings. For the small minority of members who may find it difficult to continue servicing their housing loans after they reach the VL, CPF Board assesses their situation and has allowed them some flexibility on a case-by-case basis. For example, where giving such flexibility helps them tide over a period of temporary hardship, or where the member is in the midst of right-sizing his property to avoid defaults. CPF Board will continue to exercise such flexibility and discretion where the case merits.

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Mr Gan Thiam Poh (Pasir Ris-Punggol): Sir, I am not against members of the public being prudent when it comes to CPF savings for their retirement. But I do receive feedback from residents. They are saying that since we have the Lease Buyback Scheme, that is, 30 years to top up their Minimum Sum, there is a safety net there and there is assurance for their retirement. Currently, they may face cost of living pressures and there is a strain on their financial resources, so they really hope that the rule can be revised. That is one case. Also, we have cases where they have surpluses in their CPF balances, and they do not want to pay any interests. They would rather use their CPF to pay up. After all, they feel comfortable with that so that they can have more cash to pay for their daily expenses. As such, I would like the Ministry to consider this aspect.

Mr Speaker: Minister of State, do you want to respond to that? No. We will then move on to Question No 25. Mr Ang Wei Neng, ask your Question.