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CPF Balance With Less Than $40,000 Can Also Join CPF LIFE

Lianhe Zaobao (19 February 2009) : CPF Balance With Less Than $40,000 Can Also Join CPF LIFE 


Lianhe Zaobao (15 February 2009) : Questions on CPF LIFE  


CPF Balance With Less Than $40,000 Can Also Join CPF LIFE
- Lianhe Zaobao, 19 February 2009

We refer to Mr Zhou's letter 'Questions on CPF LIFE', which was published in Lianhe Zaobao on 15 February 2009.

2.   In his letter, Mr Zhou asked why a minimum balance of $67,000 in members' CPF was set, before they could be allowed to participate in CPF LIFE. The Ministry would like to clarify that there is no minimum CPF balance that members need to have in order to participate in CPF LIFE. Members turning age 55 in 2013 and beyond will be automatically included if they have at least $40,000 in their Retirement Accounts. Members with less than $40,000 in their Retirement Accounts can opt in.

3.   For more information on CPF LIFE, please visit the CPF Board's website. You can also call 1800-LIFE-CPF (1800-5433-273) or email


Questions on CPF LIFE
- Lianhe Zaobao, 15 February 2009

The CPF LIFE scheme, which has been stewing for over a year, has finally been finalized on 13 Feb.

To ease the public's confusion, the Government has simplified the 12 options into four, namely: "use-all-leave-none" (the Income Plan), "use-more-leave-less" (the Plus Plan), "use-half-leave-half" (the Balanced Plan), and "use-less-leave-more" (the Basic Plan). By "use" I refer to the part members use in their retirement; by "leave" I refer to the bequest.

In this plan, which will take effect in 2013, the Government has ruled: "Members aged 55 when they reach 2013,whose RA has at least $40,000, will be automatically enrolled into the plan."

If I've understood it correctly, one who has $40,000 in minimum sum may not necessarily mean one will start receiving the monthly sum of $530 to $700 when one reaches 65 years of age (the starting point of the LIFE scheme). There is still the "door beam" of a requirement of having $67,000 in one's RA. If you only have$40,000 in your account, you still need your children (or yourself) to top up $27,000 in order to be eligible. Also, regarding your children: "from 1 Apr onwards," you must have the minimum sum of $40,000 before they can top up your account. Not simple, indeed.

My question is: first, why this "door beam" of $67,000? For those with not enough funds, who can neither top up by themselves nor rely on children to do so, can they not be allowed to simply make a proportionate top-up? Let's say for the "use-all-leave-none" option, those with $67,000 can draw $640 to $700, while those with only $40,000 can be allowed to draw between $382 and $418. Better than nothing, don't you think? (Editor: Based on ZB's understanding, those with insufficient funds will not be included in the plan, but will be allowed to opt in.)

Of the four options, three will allow members to leave money to their descendents. This seems to be in line with the traditional Chinese mindset. However, the notion of "raising children to support oneself in old age" is all but fading in modern society, and the meager CPF savings is already no enough to support oneself, let alone one's children. Would having these options cause children to start disputes over their inheritance, when they would otherwise not even have thought about such things? Rather than having children top up parents accounts first, then creating bequests out of the withdrawable portion, why not let members make smaller contributions in the first place? What does the Government think?

Experts have highlighted that the use-all-leave-none option may cause members to lose all of their CPF savings should they pass away before 65. But people in their 70s and 80s are all over the country. Take a set of figures for instance. If you live to 75, you would be withdrawing monthly sums of between $640 to $700 for ten years. You would have received between $76,800 and $84,000. This sum exceeds the minimum sum of $67,000. You don't make a loss. Why not choose "the use-all-leave-none" option?