CPF MINIMUM SUM TOPPING UP SCHEME

CPF MINIMUM SUM TOPPING UP SCHEME: 2.

Mrs Mildred Tan asked the Minister for Manpower (a) what is the number of people above 55 years of age who do not have the Minimum Sum in their CPF accounts; and (b) what is the progress of the CPF Minimum Sum Topping Up Scheme.

The Minister for Manpower (Mr Gan Kim Yong): Sir, the CPF system not only provides for the retirement needs but also the housing and healthcare needs of its members. If we include property pledge,

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for the cohort who turned 55 in 2010, over 40% of active CPF members attained their cohort Minimum Sum set at $123,000 even after lump sum withdrawal at 55. This is an improvement over the 37% attained in 2009 which had a lower Minimum Sum requirement then.

The cash savings in the Ordinary and Special Accounts which contribute towards the Minimum Sum-attainment represent only part of members’ retirement savings, as almost half of CPF savings are invested in housing. Adding back sums withdrawn for housing, the average savings of active members who turned 55 in 2010 will be $226,000, excluding balances in the Medisave Account. Correspondingly, if Ordinary Account monies were not used for housing, the Minimum Sum-attainment would have been about 60% for active members who turned 55 in 2010. The use of CPF for housing has helped nine in 10 Singaporeans own their own homes — an important and valuable asset that contributes towards retirement adequacy as members have various options to monetise their housing asset and to generate more retirement income if necessary.

In addition, the CPF also helps members save for medical needs in their old age through Medisave which has an average balance of $28,000 for active members who turned 55 in 2010. This is also an improvement over 2009, despite liberalising the usage of Medisave over the years. The CPF has served Singaporeans well.

To allow members to save more in their CPF, we have been steadily opening up the Minimum Sum Topping Up Scheme in recent years to encourage retirement savings. For example, we have raised the top-up limit, increased tax relief for givers, and expanded the list of eligible recipients.

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As a result of the relaxation of topping-up rules and CPF Board’s promotional efforts, the number and amount of top-ups have increased almost five folds over the last five years. In 2010, there were 30,000 top-up transactions totaling $250 million. We will continue to encourage members to top up their CPF savings to better provide for their retirement and healthcare.

Mrs Mildred Tan (Nominated Member): I just wanted to ask whether more could be done in terms of public education for the retirement top-up funds.

Mr Gan Kim Yong: Sir, I agree with the Member that we can do more in publicising and educating our CPF members on the various top-up opportunities and the benefits of topping up their accounts. CPF has been doing so with our community organisations. We are reaching out to CPF members through grassroots and community leaders, through our programmes and through our workshops, seminars and roadshows to explain to members how they can make top-ups, why they ought to make top-ups when they can and how the top-ups will benefit them. We will continue to do more of those.