At the National Day Rally last year, Prime Minister Lee Hsien Loong announced the setting up of a CPF Advisory Panel to study possible enhancements to our CPF system.

The 13-member Panel, chaired by Professor Tan Chorh Chuan, comprises academics, financial industry practitioners and community representatives from the unions, social sector and grassroots. They has just submitted Part One of its recommendations to the Government.

These recommendations cover adjustments to the Minimum Sum and the issue of lump sum withdrawals. Below is a summary of the changes ranked according to Yay, Meh and Bleh:

1. CPF Members have the option to withdraw up to 20% of their Retirement Account Savings at the Payout (Yay!): This withdrawal is inclusive of the $5,000 that can already be withdrawn from age 55. This will be made available to CPF members who turned 55 from 2013 onwards.

2. Incentives to top up the CPF accounts of lower-balance or non-working family members (Yay!): The Panel proposes that the Government encourage this act to help other family members (non-working spouse, wives with longer life expectancy). For example, CPF rules could be relaxed to allow members to transfer their CPF savings to their spouses’ accounts. This will allow both spouses to earn a higher interest rates on the savings.

3. Provide public education and financial counselling to improve members’ understanding of the CPF system (Yay!): Critical for two key decisions - 1) At 55, members who own a property can set aside the Basic Retirement Sum, subject to a charge/pledge on the value of the property; 2) At Payout Eligibility Age, members can opt to withdraw 20% of their Retirement Account savings.

4. “Draw Down Age” to the “Payout Eligibility Age” (Meh):  Provide the option to voluntarily delay members' payout start age, up to age 70, in exchange for higher payouts for life.

5. Minimum Sum re-named as "Basic Retirement Sum" (Meh): A CPF member will set aside the Basic Retirement Sum of $80,500, to provide a monthly payout of about $650 to $700. This is provided if the retiree owns a home.

6. What is "Full Retirement Sum"? (Meh) Basic Retirement Sum X 2, if CPF members do not own their homes or do not wish to pledge it.

7. What is “Enhanced Retirement Sum”? (Meh) Basic Retirement Sum X 3, for CPF members who wanted higher payouts. They can top up their CPF LIFE premiums with their CPF savings or cash, subject to a cap.

8. Basic Retirement Sum increased by 3% from the previous cohort: (Bleh) From 2017 to 2020, each cohort of members turning 55 should have its Basic Retirement Sum (BRS) increased by 3% from the cohort in the preceding year.  The recommended fixed rate of increase in the BRS is significantly lower than the average annual increase in the Minimum Sum of about 6% per year.

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