CENTRAL PROVIDENT FUND MONIES (Education of public on its use)

Column No : 3131

CENTRAL PROVIDENT FUND MONIES:

(Education of public on its use): 5.

Dr Amy Khor Lean Suan asked the Acting Minister for Manpower in light of the recent Central Provident Fund (CPF) changes (a) what kind of information and through what medium the CPF Board will provide and use as a means of educating the public on the use of their CPF monies for housing purchases and other approved investments so that CPF members will make the most informed decision; and (b) if the CPF Board or financial institutions can be tasked or required by the Monetary Authority of Singapore to mandatorily advise Singaporeans who use CPF monies to finance their housing purchases as to the estimated time when they will exhaust their allowable CPF monies for mortgage repayments and thus will need to service their loans entirely with cash.

The Acting Minister for Manpower (Dr Ng Eng Hen): Mr Speaker, Sir, because Singaporeans will live longer, they need to consider carefully how they use their CPF monies which, in essence, is their personal retirement fund. This is implicit in Dr Amy Khor's question and I agree with her.

To help Singaporeans prepare adequately for retirement is a mandate for the CPF Board. And therefore, the CPF Board will enhance its public education programme to meet this objective. It will make available to members educational information modules structured to their life events, such as when they start work, get married, buy a house, and so on. And these modules will cover basic financial planning and investment. They will guide the member on what to consider when making a decision over the use of his CPF monies and how these decisions would affect his retirement savings. These modules will be ready by the first half of next year. They will be made available through the CPF website and at CPF Board offices, and supplemented by other mediums, such as newsletters, publications, seminars, print and broadcast media.

Second, the Board will provide more information on various features of investment products, I think a point brought up in the last parliamentary Question. For these investment products, information such as charges by different agent banks, the market value of investments held under the CPF investment schemes and, for each member, how the products they have bought have performed compared if they have left it in the CPF, will be given.

Third, the CPF Board already makes available to its members relevant tools, such as online calculators at its website to let members estimate how long their CPF savings can be used before reaching the housing withdrawal limit. Members can also use the CPF Savings Projector at the CPF Board's website to project their future CPF savings and estimate the monthly income they would receive from their Retirement Account.

The Monetary Authority of Singapore (MAS) does not regulate the provision of advice relating to mortgages, as these are not investment products. Members are encouraged to ask for more information from their lending institutions on the mortgage repayment schedules and clarify their monthly loan statements, if they feel that they require additional information on their mortgages to better plan for their finances. They can also use the various information services and tools provided by the CPF Board. We have, what we call, the online Housing Withdrawal Limit calculator. For members using their CPF monies to service their housing loans, the Board provides them a three-month advance notice before they reach their CPF withdrawal limit for housing. This will give members some time to make alternative financial arrangements to meet their mortgage payments. But of course we should not wait till then.

The CPF Board will work closely with the MAS and other Government agencies, as well as industry associations, to provide more consumer education on financial products and services under the MoneySENSE programme, as announced by DPM Lee earlier.

Dr Amy Khor Lean Suan: Sir, I would like to ask the Acting Minister that whilst mortgage is not under the purview of MAS, could the CPF Board work with the financial institutions with regard to asking them to advise, especially first-time home owners, on their mortgage sum because the understanding of how long before they exhaust their limit is very important, since it will impact on their housing affordability and the amount of loan that they should borrow from the bank. Because my understanding is that there is no standardised procedure now.

Mr Speaker: Dr Khor, please ask your question and no speeches.

Dr Ng Eng Hen: Yes, we will do that. But structurally, we have restricted the amount that can be used for housing to reflect the appropriate proportion, in terms of what you conscribe to the OA Account and in terms of the withdrawal limits. And we will provide the information on our website, as suggested. I think some of these are already provided.