5 changes to CPF rules: More flexibility for transfers, quicker disbursement of funds
SINGAPORE - Various rules around the Central Provident Fund (CPF) will be streamlined to make it easier for people to receive their retirement payouts and build their nest egg, under proposed changes to the CPF Act debated in Parliament on Monday (Nov 1).
They are:
1. Retirement Sum Scheme automatic transfers
Now: After their Retirement Account is depleted, members will continue receiving payouts, only if they apply to transfer money in their Ordinary Account and Special Account to their Retirement Account.
After: Members automatically continue to receive payouts from their Ordinary and Special Accounts savings when their Retirement Account savings are used up. This will benefit around 83,000 people under the Retirement Sum Scheme from the first quarter of 2022.
For CPF Life members who have started getting payouts, Retirement Account inflows will automatically be used to increase their payouts as well, benefiting some 75,000 people.
2. Flexibility in deciding when to transfer funds
Now: For members turning 65 from 2023, the transfer of Ordinary and Special Accounts savings to their Retirement Account will occur, up to their cohort's full retirement sum, once they are eligible to start payouts.
From January 2023: Members have the flexibility to decide on when to transfer the funds, anytime between 65 and 70 years old. There is no change to current rules for lump sum withdrawal of CPF savings.
3. Simplifying tax relief rules
Now: There is a $7,000 tax relief cap for the Retirement Sum Topping-Up scheme provided to givers.
Separately, there is also a limit for tax relief for the Voluntary Contributions to MediSave Account scheme for the recipients, which depends on the CPF Annual Limit and the current Basic Healthcare Sum.
From Jan 1, 2022: To align rules for both schemes, tax relief for the Voluntary Contributions to MediSave Account scheme will also be provided to givers, instead of recipients
There will be a higher combined tax relief cap for both schemes set at $8,000. This means the cap is $8,000 for top-ups to self and $8,000 for top-ups to loved ones.
4. Quicker disbursement of CPF money after a member dies
Now: CPF funds can continue to be retained with accrued interest up to seven years after a member dies. Discounted Singtel shares are also retained in the CPF accounts for up to seven years.
From April 2022: The duration that CPF money is retained after death will be shortened to six months.
Discounted Singtel shares will also be liquidated and automatically disbursed six weeks after the member's death.
There is no change to the nominees' rights to make claims at any time.
5. Government to recover grants if eligibility criteria not met
Now: The Government can already claw back grants made erroneously to ineligible people
From Jan 1, 2022: This is just a technical update to the rules so the Government can recover grants in cases where the grants were automatically issued to eligible members, but the members later chose not to continue meeting the eligibility conditions.
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