CENTRAL PROVIDENT FUND (Topping-up of parents' accounts)

CENTRAL PROVIDENT FUND:

(Topping-up of parents' accounts): 9.

Mr Low Thia Khiang asked the Minister for Manpower whether he will consider allowing Central Provident Fund members who have healthy CPF savings to top-up the CPF accounts of their parents who have exhausted their Minimum Sum savings.

The Minister for Manpower (Dr Ng Eng Hen): Mr Speaker, Sir, children are allowed to top up the retirement accountsof their parents who must be aged 55 and above.The amounts that they can topup to is the Minimum Sum applicable to their parents. In order for the child to do so, the childmust have regrossed Ordinary Accountand Special Accountbalances of more than twice the prevailing Minimum Sum, and netbalances of more than twice the cash component.

Let me translate to this year's terms. In other words, for 2004, in order for a childto top up his parents' accounts, his own account must have more than $169,000 in their regrossed balance, of which $84,500 must be in cash. The reasons for these limitations are toensure that members, before they topup their parents' accounts, musthave sufficient savings for their own retirement needs before they help their parents. In addition to this, members can also make cash top-ups to their parents’ CPF accounts.

Mr Low Thia Khiang (Hougang): Sir, clarification. The Minister said that the parents must reach the age of 55. How about after 55? Can children be allowed to continue to top up the parents' Medisave accounts?

Dr Ng Eng Hen: Sir, there are a number of conditions. Let me reiterate them.

Firstly, the parents must be 55 or older. In other words, the child can top up his parent's account any time after the parent is 55 or above.

Secondly, the childmustmeet minimum requirements and I have specified the amounts. If these conditions are satisfied, he can top it up.

Mr Low Thia Khiang: Clarification, Sir. What about parents who have retired before the age of 55 and the children do meet the requirements? Can they top up their parents' accounts?

Dr Ng Eng Hen: Sir, we have limited it to parents who are 55 and above.

Mr Low Thia Khiang: What was the rationale for the age limit of 55?

Dr Ng Eng Hen: Sir, the rationale goes back to what our CPF system was devised for.

Firstly, it was an individualised savings account. It is the safety net in our system. In other words, it is a specific feature in our system where you take care of yourself. So, first of all, we said that there must be a minimum balance before the person can top up his parents'accounts.

Secondly, we have limited it to parentsabove 55, particularly because, for many of them indeed, they are also working. The retirement age now is 62 and,even for those above 50, the re-employment rate is about 50%. So, many of them are still working.

So, this principle of saving for your own affordability, for your own retirement needs, continues to apply. Having said that, for the minority of CPF members who have large amounts,they are not many and we can work the numbers. In other words, very few children with parents below 55 have these balances. So, it is somewhat theoretical, but we can consider the hon. Member's proposals.