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27 Jan 2019
Ministry of Manpower
Suggestion View - 573
Allow partial withdrawal of CPF based on financial need

A man aged 62 and unemployed approached me. He has savings in the Central Provident Fund with interest of $5,000 accrued each year. He wanted to withdraw the interest earning to meet his daily expenses but CPF does not allow it. He asked me to raise this matter to the govt.

I want to raise a broader issue. It is not just the interest that needs to be withdrawn. In some cases, the member may need to draw out the savings as well.

There will be different groups of people with different needs. It is better for CPF to have a way to deal with these needs. 

Here is my proposed solution.

The current govt policy is to ensure that people have enough savings for their retirement. They want to force people to work until the retirement age (maybe 65 or 70) before they start to draw down their CPF savings and interest in monthly installments.

This policy may suit the majority of CPF members, but the needs of a minority has to be considered as well. The minority are those who are unemployed or does not earn enough to meet their basic living needs. Perhaps they have medical bills to settle, which cannot be covered by MediShield and Medisave.

These people should be allowed to draw out some of their savings in monthly installments to meet their needs. 

How can CPF decide on whether to approve the request for early withdrawal?

They can engage assessors who can look into the application and give a recommendation to approve or decline the application. These assessors perform a similar role as bank officers who have to approve application for a loan from the bank. 

In the case of CPF withdrawal, the risk is small. The applicant is withdrawing his own savings in the CPF and is not borrowing money from the CPF that needs to be repaid.

If th applicant is allowed to withdraw his savings earlier, there is a risk that the savings will not be sufficient for retirement. This is not a big issue.

For the applicant, their financial needs are at the present time. It needs to be addressed now. Sure, it will create a problem at a future date, maybe in 10 or 20 years. I prefer the present needs to be addressed. There could be some other solutions when the time comes in the future.

The cost of the assessors, who have to be paid by CPF, could amount to (say) $300 per case. I suggest that the applicant should pay $100 for an application and the rest should be absorbed by CPF. 

There are many financial advisers who now sell insurance. Some of these people, who are already trained on financial matters, can be employed as CPF assessors and given further training on the specific task of assessing the applications. 

I hope that the Minister for Manpower will look into this suggestion.

Tan Kin Lian


Agree: 24  Disagree: 1  Vote