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21 Feb 2019
Central Provident Fund
Suggestion View - 742
Withdrawal of savings from CPF

I give my views about the withdrawal of savings from the Central Provident Fund.

When CPF first started, the withdrawal age was 55 years. Now, a large portion of the CPF savings are deferred to age 70 and can only be taken out in monthly installments. 

Many members are angry about the delay in withdrawals. They insist that they be allowed to take out all of their savings at age 55.

I like to give my views about this matter.

When I started work fifty years ago, most workers retire at age 55 and live an average of 13 years to age 68. 

Over the last 50 years, the life expectancy has increased by about 15 years. Based on this factor, it is reasonable for the withdrawal age to be increased to 70 years.

However, we have to consider other factors as well. What are these factors?

a) In the past, most workers in full time employment could expect to keep their jobs to the retirement age of 55 years. This is not the case today. Most of the older workers are likely to be retrenched or to lose their full time jobs before they reach 70 years. Some may be re-employed after passing age 60, but they usually have to face a reduction in salary.

b) Many workers prefer to take out some of their savings and to travel while they are still fit. They might not be fit for travel when they reach age 70.

c) Many of them have financial commitments and need to take out some of their savings to repay loans. These loans might be taken to tide over a period of unemployment or to send their children for overseas education.

These reasons cannot be ignored. They are legitimate reasons from the perspective of the members. Many of them are passionate about the issue. They consider the holding back of their CPF savings to be a breach of promise.

We have to consider two risks of allowing early withdrawals of the CPF savings:

a) If a large part of the savings is taken out early, there will be inadequate savings to last for the remaining life of the citizens. When their CPF savings are fully depleted, the citizens have to rely on public assistance to meet their living cost during old age.

b) When the elderly takes out their savings, they may lose the savings in bad investments or in operating a business. They may also be cheated by crooks who target their savings.

The policymakers must be worried about these risks.

What can be done to meet the financial needs of the citizens and to mitigate the risks? I suggest the following approach:

a) Allow the members, on reaching age 55, to apply for withdrawal of their savings, except for a certain sum (lower than the current minimum sum) that has to be kept for the future. The member has to attend a counseling session to be conducted by a trained financial adviser. The member should be informed about the risk of early withdrawals. However, the final decision has to be taken by the member, as he (or she) is withdrawing his own savings.

b) Pay an attractive interest rate on the savings retained in the CPF beyond age 55 like a fixed deposit. If CPF pays an interest rate that is higher than commercial banks for a term of 1, 2 or 3 years, many members would be willing to keep their savings in the CPF. Many of them do not mind, if they have the right to withdraw the savings at the end of the term or to renew it.

There is still the risk the early withdrawals will deplete the savings and leave an inadequate sum to meet the future needs. We have to accept this outcome. The low income citizens need access to their savings to meet their immediate needs. They should not be forced to keep their savings to meet the future needs.

I am in favor of allowing the citizens to withdraw their savings from age 55, apart from retaining a small sum (say $50,000) for their future needs.

Tan Kin Lian

Please vote whether you agree or disagree with my suggestion.


Agree: 64  Disagree: 0  Vote