CENTRAL PROVIDENT FUND CONTRIBUTIONS (Use by undischarged bankrupts to purchase HDB flats)

The following Question stood on the Order, Paper -

Mr Ch'ng Jit Koon: To ask the Minister for Labour (a) what is the rationale for the stipulation that an undischarged bankrupt is not allowed the use of his Central Provident Fund contributions to purchase a Housing and Development Board flat; (b) what is the number of persons affected; and (c) whether he will consider amending the aforementioned stipulation as there is already adequate safeguard that the vendor of an HDB flat will have to repay into his account in the CPF the monies withdrawn by him.

Mr Ch'ng Jit Koon being on leave of absence -

Mr Ho Kah Leong (Jurong): Question No. 2, Sir.

Mr S. Dhanabalan: Mr Speaker, Sir, under section 13(3) of the Central Provident Fund Act the CPF savings of an undischarged bankrupt are deemed to be impressed with a trust in favour of the persons entitled to the savings upon his death. The purpose of this provision is to protect the savings of the undischarged bankrupt from seizure by his creditors. Such protection is in the interest of persons entitled to the savings upon the death of the undischarged bankrupt.

Because of this provision an undischarged bankrupt has not been allowed to withdraw his contributions.

However, under section 44(2) of the Housing and Development Act, a flat purchased by an undischarged bankrupt is protected from seizure by the official assignee to satisfy creditors. The same protection is afforded by section 41 (2) of the Jurong Town Corporation Act for JTC flats purchased by an undischarged bankrupt.

Since there is this specific protection from seizure of an HDB or JTC flat, the Government will be amending section 13(3) of the Central Provident Fund Act to allow an undischarged bankrupt to use his CPF savings to purchase such a flat.

Should the undischarged bankrupt sell his HDB or JTC flat, he is required to return to the CPF the savings withdrawn with interest, or the proceeds of the sale, whichever is less.

At the end of November 1979 a total of 69 CPF members who are undischarged bankrupts have not been allowed to withdraw their savings to buy HDB or JTC flats. They will be allowed to do so when the amendment is passed.