CPF WITHDRAWALS BY MALAYSIANS

Mr Chay Wai Chuen asked the Minister for Manpower if he will inform the House whether the CPF Board will allow Malaysians to withdraw their CPF savings before the normal withdrawal age and, if so, what are the conditions for such early withdrawals.

Dr Lee Boon Yang: Under current CPF withdrawal rules, a West Malaysian is allowed to withdraw his CPF savings in full if he is at least 55 years old and has left Singapore permanently to stay in West Malaysia. He can also withdraw his CPF from age 50 if he has not worked in Singapore for the 2 years before his withdrawal application. On the other hand, East Malaysians and other foreigners are allowed to withdraw their CPF at any age when they leave Singapore permanently.

West Malaysians are treated differently from East Malaysians and other foreigners because of the historical links between Peninsular Malaysia and Singapore. They are also treated differently from Singaporeans. They can withdraw their CPF from age 50 without setting aside the Minimum Sum, unlike Singaporeans who can only withdraw their CPF at age 55, after setting aside the prevailing Minimum Sum.

All foreigners working in Singapore are aware of the rules of the CPF system. Contributions by foreigners to CPF in the past were made in accordance with the prevailing contribution rules. They enjoyed the privilege of tax-exemptions on CPF savings but are also bound by the withdrawal rules. Subsequent changes to CPF rules to exempt foreigners from CPF contributions cannot be applied retrospectively. These changes did not take away past tax benefits enjoyed by the foreigners, including Malaysian CPF members. Hence, foreigners and West Malaysian CPF members should be bound by the prevailing withdrawal rules, which they had accepted when they came to work in Singapore in the first instance.

However, recently, the Prime Ministers of Singapore and Malaysia had met to discuss wider co-operation between both countries, including financial co-operation and the long-term supply of water to Singapore. Changes of CPF withdrawal conditions for West Malaysians in the context of this wider co-operation have also been discussed. The two Prime Ministers have not yet reached agreement on the package of co-operation.