Common questions (and answers!) on the latest CPF changes: Part 3

In the last of a three-part series, Straits Times correspondent Joanna Seow answers questions on how the changes affect withdrawals from your CPF accounts and other decisions you will need to make.

How much of my savings can I withdraw at 55?

Up to $5,000 at any time after 55 unconditionally.

If you meet the Basic Retirement Sum of $80,500 in 2016, you can withdraw whatever you have beyond that, assuming you pledge your property or used enough CPF savings to buy it. You do not have to meet the Medisave Minimum Sum ($43,500 since July 1, 2014).

If you do not own a property or do not want to pledge it, you can withdraw whatever you have beyond the Full Retirement Sum of $161,000 in 2016. You must have met the Medisave Minimum Sum. 

What is a property pledge/charge?

A property pledge is a commitment saying that if you sell your property, you will refund the pledged amount, as well as any CPF money used to buy the property and interest it would have accrued, into your CPF account. A property charge is automatically applied when you use Ordinary Account savings to buy a property. The amount you used, and interest it would have accrued, must be returned to your CPF account if the property is sold. You still own your property after the pledge or charge. 

How much of my savings can I withdraw at the payout eligibility age (65 from 2018 onwards)?

Up to 20 per cent of your Retirement Account balance, including the $5,000 you could have withdrawn from 55. If 20 per cent comes up to less than $5,000, you can draw a maximum of $5,000. 

How will a lump sum withdrawal affect my monthly payouts?

Your payouts will be smaller, as the amount annuitised under CPF Life is less .For example, if you had the Basic Retirement Sum at 55 in 2016, it will have grown to $123,600 at 65, giving you payouts of around $680 per month. If you had made the maximum withdrawal, your payouts would go down to around $580 per month. 

How can I help my immediate family receive higher payouts?

You can help them grow their Special or Retirement account savings by transferring your savings in excess of your Basic Retirement Sum to their accounts. You can also top up their accounts with cash and receive up to $7,000 in tax relief per calendar year. This applies if the beneficiary does not earn more than $4,000 in the year before the top-up, or is handicapped. 

What choices will I need to make at 55?

  • How much you want to receive as payouts in the future, and how much money to set aside in your Retirement Account.
  • Whether to withdraw $5,000.
  • If you have savings beyond the Basic Retirement Sum or Full Retirement Sum, whether to withdraw them.
  • Whether to use any savings beyond the Basic Retirement Sum to top up accounts of loved ones. 

What choices will I need to make at 65 or the payout eligibility age?

  • Whether to make a lump sum withdrawal of up to 20 per cent.
  • When you want your monthly payouts to start.
  • Which CPF Life plan to join (before payouts start). 

Read Part 1 and Part 2 of this series on CPF recommendations to find out how the proposed changes can affect your retirement needs.

Source: The Straits Times © Singapore Press Holdings Limited. Permission required for reproduction

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