CPF MINIMUM SUM SCHEME (Effect on bank loans secured against HDB flats)

Mr Chng Hee Kok asked the Minister for Labour whether the Minimum Sum Scheme is affected by bank loans secured against Housing and Development Board flats.

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, under the Minimum Sum Scheme, a CPF member who owns an HDB flat is allowed to pledge his flat in lieu of setting aside the Minimum Sum in cash. The maximum amount that the member can pledge is the value of the flat less any HDB outstanding loan at the time of the pledge. Should the CPF member subsequently take out a bank loan, the CPF Board will lodge a charge on the property to secure the Minimum Sum. In the event of a sale, the proceeds will first be used to pay HDB and the CPF Board before paying the bank, as the CPF charge ranks before the bank's charge.