CENTRAL PROVIDENT FUND (Withdrawal to help relatives)

Mr Cheo Chai Chen asked the Minister for Labour whether he will relax on the use of the Central Provident Fund so that members with large savings in their CPF accounts will be allowed to withdraw a certain amount of money, within a specified scope, to help their relatives in the payment of housing loans, conservancy charges and even living and medical expenses during unusually hard times.

Dr Lee Boon Yang: Mr Speaker, Sir, the CPF contribution rate of 40% is based on a member's old-age, housing and health requirements. Most CPF members have used part of their savings to purchase HDB flats or private residential properties. They also use the monthly CPF contributions to meet their mortgage repayments. The result is that more than half of the CPF members have net balances of less than $22,000.

It is therefore not feasible to allow CPF members to withdraw their savings to finance repayment of housing loans taken by their relatives, or to pay conservancy charges and living expenses incurred by their relatives.

Sir, on medical expenses, the current Medisave Scheme allows the CPF member to use his Medisave to pay for the hospitalisation expenses of his dependants which include his spouse, children, parents and grandparents, provided their grandparents are either Singapore citizens or permanent residents. Extending this to include other relatives will only make it more difficult for the member to save for hospitalisation needs in his old age.

Essentially, the CPF concept is based on family self-reliance. Each employee should save to meet his future requirements. Sir, the House will today consider extending this concept to the self-employed by requiring them to contribute to Medisave. This is far better than to encourage a system where personal old-age savings are being used prematurely to pay for relatives' living expenses.