CPF SAVINGS (Use for repair and renovation of properties)

Dr Tan Boon Wan asked the Minister for Labour whether his Ministry will consider allowing members to use their savings in the Central Provident Fund to repair, maintain or renovate properties bought with CPF savings.

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, this matter has been raised in this House on several occasions previously. I have explained that allowing CPF savings to be used for home repair, maintenance and renovation would be contrary to the objective of building up savings to meet old age needs. Allowing such use of CPF savings would lead to depletion of the old age savings of CPF members. At the current 40% contribution rate, CPF savings can only provide a retired member 20% to 40% of his last drawn pay, which is by no means excessive. Any new ways to help a CPF member to use his CPF savings before the withdrawal age will mean that his retirement income would be even less than expected. Hence, my Ministry has decided not to allow the use of CPF savings for home renovation, whether it is private properties or HDB flats.

Although some renovations may enhance the value of property, it is extremely difficult to ascertain which renovation work will lead to permanent enhancement and which are consumption to keep up with changing tastes. It would also be difficult to decide what is upgrading work and what is just part of cyclical repair and refurbishment. There is also no limit to the amount and frequency of home renovation which can easily lead to premature consumption of old age savings.

I would like to urge CPF members not to see their CPF savings as a goose providing them with an unending stream of golden eggs. CPF savings are your hard-earned savings put aside for the future when you retire. CPF members should think of prudent ways to invest CPF savings so that when you retire, you have a bigger nest egg, not ways of using up precious savings long before retirement.

Some Members of this House may say that we have already allowed CPF savings for the HDB Upgrading Programme, so why not allow CPF savings for renovation too. I wish to point out that the HDB Upgrading Programme is a national asset enhancement programme. The programme involves improvements in the entire block and its surroundings, not just renovation in the flats. Government also grants a large subsidy to meet the total upgrading cost. There is less risk that the home-owner will not be able to recover his share of the upgrading costs. Hence, we have allowed CPF savings to be used for the home owner's share. However, if a HDB flat owner wishes to renovate his HDB flat, he cannot use his CPF for the renovation.