CENTRAL PROVIDENT FUND (Transfer of savings from Ordinary Account to Special Account)

Mr Chia Shi Teck asked the Minister for Labour if Central Provident Fund members will be allowed to transfer savings in the Ordinary Account which they do not intend to withdraw to the Special Account.

Dr Lee Boon Yang: The savings in the Special Account are meant for old age. Hence, CPF members cannot withdraw these savings for any other purposes (eg housing and investment) before age 55. At age 55, CPF members can use these savings to meet the Minimum Sum requirement. As such savings are kept with the CPF Board for a long term, additional interest at 1.25% point above the normal CPF rate will be paid on the savings from 1st July 1995.

If we allow transfer of savings in the Ordinary Account to the Special Account, such transfers can only be allowed if they are made irrevocably. Otherwise, there is no guarantee that the Ordinary Account savings transferred to the Special Account will remain there for long term to warrant the payment of the additional interest. However, if that condition is imposed, CPF members who had transferred their Ordinary Account savings to their Special Account, could end up having insufficient savings in their Ordinary Account when they later wish to upgrade to higher quality housing.

The Ministry is therefore not in favour of allowing transfer of CPF savings from the Ordinary Account to the Special Account.