Allowing CPF Members to Complete Purchase of HDB Flats By Using Retirement Account Funds

Mr Murali Pillai asked the Minister for Manpower what are the circumstances in which the CPF Board exercises its discretion to allow its members, who have turned 55 and do not have savings above their basic retirement sums in their Retirement Accounts, to complete the purchase of HDB flats using the monies in their Retirement Account and, in such situations, how much in percentage terms will be allowed to be withdrawn from the members' CPF accounts.

Mrs Josephine Teo: When a member turns 55, a Retirement Account (RA) is created for him. Funds in his Special Account (SA) are transferred to the RA. If the resulting RA balance is less than the Full Retirement Sum (FRS), the shortfall may be made up by a transfer from his Ordinary Account (OA) to his RA. The member could choose to withdraw the amount above Basic Retirement Sum (BRS) if he has sufficient property charge or pledge. Should the member need to reserve monies in his OA to service mortgage repayments, a request can be made to the CPF Board to withhold the transfer to RA.

The RA funds earn interest and will eventually be used to provide the member with a stream of income. The OA continues to exist even after the RA is created, earning interest and receiving contributions if the member continues working. The fresh inflows to the OA can also be used for their housing needs.

Members usually take into account their available OA and cash savings when deciding what HDB flat to purchase. With good planning, most members have sufficient funds to complete the HDB purchase. That said, CPF Board has exercised flexibility in exceptional cases. The Board takes into account member's retirement adequacy and outstanding loan amount in deciding whether an exception can be made. For example, the Board has, upon appeal, allowed CPF members to use their RA savings to pay for their housing, up to the amount that originated from their OA, even if this results in their RA savings dipping below the BRS.

Overall, we need to strike a balance between allowing CPF members to use their RA savings for housing needs and safeguarding such savings for their retirement, so as not to compromise retirement adequacy.