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Clarification of CPF withdrawal policy, Retirement Sum Scheme payout duration and CPF interest rates

  1. You may have come across an online article alleging that i) CPF members cannot withdraw their CPF savings if they do not meet the Full Retirement Sum and Basic Healthcare Sum, ii) no explanation was provided for the review of the Retirement Sum Scheme (RSS) payout duration from age 95 to age 90 and that iii) the Government refuses to raise CPF interest rates.
  2. These assertions are untrue.
  3. First, from age 55, you have the flexibility to withdraw $5,000 from your Special Account (SA) and Ordinary Account (OA), regardless of whether you meet your cohort’s Full Retirement Sum (FRS) or Basic Retirement Sum (BRS). In fact, you can withdraw any amount above your cohort’s FRS. If you own a property, you can withdraw any amount above your cohort’s BRS, which is half of the FRS. The amount you can withdraw is not affected by the Basic Healthcare Sum, which is the maximum amount you can have in your MediSave Account.
  4. Second, at the 4 November 2019 Parliament session, Minister for Manpower Josephine Teo explained that the Retirement Sum Scheme (RSS) payout duration will be adjusted to last up to age 90, to address members’ feedback that the payout duration of up to age 95 was too long. With this adjustment, RSS payouts will continue to protect 2 in 3 members from outliving their payouts. Lowering the maximum age for payouts, to below 90, will mean that a higher proportion of members will outlive their payouts. As a result of this review, RSS members who are currently receiving payouts will either get the same or higher payouts. No one will see a reduction in payouts they are currently receiving.
  5. Third, CPF members earn interest rates of 2.5% and 4% per annum on their OA and Special, MediSave and Retirement Accounts respectively. The Government has been extending the 4% floor rate since 2008 in light of the global environment of exceptionally low interest rates. An extra 1% interest is paid on the first $60,000 of a member’s combined balances. Members aged 55 and above will also earn an additional 1% extra interest on the first $30,000 of their combined balances, effectively earning up to 6% interest per year on their retirement balances.
  6. The CPF Board invests CPF members’ monies in Special Singapore Government Securities (SSGS), guaranteed by the Government which has a triple-A credit rating. This arrangement allows CPF members to be shielded from investment risk – the Government bears the risk. No other market player can match the returns and safety that CPF provides to its members. The proceeds from SSGS issuance are invested by the Government over the long term.