Amendments to the CPF Act include allowing extended family members and employers to top up a CPF member’s Special or Retirement account with cash.
During the Budget Debate in March 2007, the Minister for Manpower announced that from 1 January 2009, CPF members aged 55 years or older who sell their properties are required to refund the CPF moneys used in buying the properties to make up the Minimum Sum. This is to help members build up the Minimum Sum to meet their retirement needs.
The CPF Board would like to remind members of this change to allow those intending to sell their properties sufficient time to make the appropriate financial arrangements.
From 1 January 2009, members who sell their properties that have been purchased with their CPF savings are required to refund the sale proceeds to make up the Minimum Sum, up to the amount of the CPF savings that had been withdrawn and the interest that would have been earned on the withdrawn savings.
illustration of amount refundable under the new refund rule for members aged 55 and above
Example 1
Member X is 58 years old and intends to sell his property.
| (a) | Member’s Minimum Sum | $90,000 |
| (b) | Balances in Retirement Account (excluding interest earned) | $30,000 |
| (c) | Property pledge plus the accrued interest on the pledge | $51,000 (Property was pledged for $45,000 at age 55) |
| (d) | Principal CPF withdrawn for the property plus the accrued interest | $100,000 |
If he sells his property before 1 January 2009, he has to refund the property pledge plus the accrued interest on the pledge of $51,000 to his CPF Retirement Account (RA).
If he sells his property on or after 1 January 2009, he has to refund $60,000 [i.e. (a) – (b)] to his RA to meet his full Minimum Sum.
Example 2
Member Y is 60 years old and intends to sell his property. However, he has used less CPF moneys for his property, and has pledged his property for a lower amount.
| (a) | Member’s Minimum Sum | $80,000 |
| (b) | Balances in Retirement Account (excluding interest earned) | $30,000 |
| (c) | Property pledge plus the accrued interest on the pledge | $39,000 (Property was pledged for $33,000 at age 55) |
| (d) | Principal CPF withdrawn for the property plus the accrued interest | $37,000 |
If he sells his property before 1 January 2009, he has to refund the property pledge plus the accrued interest on the pledge of $39,000 to his RA.
If he sells his property on or after 1 January 2009, he only needs to refund $37,000 [i.e. (d)] to his RA. This is because while he needs another $50,000 [i.e. (a) – (b)] to meet his full Minimum Sum, he has only withdrawn $37,000 (including accrued interest) from his CPF for the property.
Members who had attained the age of 55 before 1 July 1995 will not be affected by the change in the refund rules that will take effect from 1 January 2009.
Source: CPF Board
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