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Written Answer by Mr Tan Chuan-Jin, Acting Minister for Manpower, to Parliamentary Question on Use of CPF Savings to Pay Mortgage

Notice Paper No. 365 and 380 of 2013 For The Sitting On 21 Oct 2013
Question No. 1480 and 1506 For Written Answer

MP: Mr Ang Wei Neng

To ask the Acting Minister for Manpower (a) how many HDB flat owners have to use cash to pay the monthly HDB loan because of (i) the valuation limit (ii) flat owners having reached 55 years of age and their money in the CPF Ordinary Account has to be transferred to their Retirement Account; and (b) whether HDB will consider periodic re-valuation of HDB flats for existing owners so that the valuation limit can keep pace with the current market price of the flats.

MP: Mr Alex Yam Ziming

To ask the Acting Minister for Manpower with regard to the transfer of CPF funds from the Ordinary Account to the Retirement Account (a) whether the Ministry will consider a tiered approach for the transfer to take place over five years especially for lower income home owners servicing their housing loans through their CPF; and (b) if the Ministry is already considering such a tiered system and additional safeguards for homeowners, what is the timeline for the implementation.


  1. I refer to the queries by Mr Ang Wei Neng and Mr Alex Yam on the CPF Valuation Limit (VL) for housing and the transfer of CPF savings from the Ordinary Account (OA) to the Retirement Account (RA) at age 55.
  2. CPF members should set aside sufficient CPF savings for retirement and should not compromise this by overspending on their housing. The VL and the transfer of CPF savings at age 55 to set aside the Minimum Sum (MS) in the RA help to ensure this.
  3. The VL is set at the lower of the purchase price or property value at the time of purchase. It is not adjusted based on the current value of the property, which could fluctuate depending on the property cycle. Capping CPF usage for housing minimises the risk of CPF members not being able to recover the full amount of CPF withdrawn for his property, especially if there is a property down turn. CPF members can use their CPF savings above the VL provided they have set aside at least half of their MS for retirement. The VL also does not apply to new flats purchased directly from the HDB and financed with a HDB loan.
  4. Today, the number of CPF members who have reached their VL and must use cash to service their housing loans is small – at less than half a percent of members who are using CPF savings for their housing loans. Of the households with HDB loan arrears of three months or more, less than 1% are affected by the VL.
  5. When a CPF member turns 55, his savings in his CPF OA and Special Account (SA) are used to set aside the MS in his RA. Only RA savings above half the MS can be used for housing. This ensures members set aside enough cash savings to meet their retirement needs.
  6. Mr Yam has proposed a tiered approach for the transfer of OA savings to RA. This is unnecessary. The vast majority of CPF members who turn 55 have sufficient savings for housing or have completed their housing loan repayments. By transferring OA savings to the RA, members enjoy higher interest rates of 4% which allows them to accumulate more savings for retirement.
  7. Among the cohort of CPF members turning 55 this year, more than 95% either do not require CPF to service housing loans, have savings in excess of half the MS, or have fresh OA contributions from work that they can use for housing.
  8. For CPF members who face difficulties with housing loan repayments because of the VL or after the age 55 transfer of OA savings to the RA, we have exercised flexibility where the case merits and have allowed them to use more of their CPF savings for housing.