The amendments to the CPF Act will make it easier for members to receive retirement payouts, simplify the rules to the topping-up and contribution schemes, and streamline the CPF system.
Parliament debated on 1 November 2021 the CPF (Amendment) Bill.
“The various amendments will help members to build up their retirement nest eggs and receive retirement payouts smoothly, while streamlining administration of CPF schemes,” said Manpower Minister Tan See Leng in Parliament.
As part of the amendments, Retirement Sum Scheme (RSS) members will automatically receive payouts from their Ordinary Account (OA) or Special Account (SA) monies, if any are left, after they have depleted their Retirement Account (RA).
Doing so would minimise the disruption to RSS members’ payouts once they have used up their RA savings.
Currently, RSS members can only continue receiving payouts if they apply to transfer their OA or SA monies to their RA.
The change will benefit 83,000 RSS members once implemented in the first quarter of next year.
For some 75,000 CPF LIFE members who had started payouts, the RA inflows will automatically be used to increase their CPF LIFE payouts by end-November 2021.
Members turning 65 from 2023 will also be given greater flexibility to decide on when their OA or SA savings are to be transferred to their RA.
The changes will see the transfer of OA or SA savings to RA when members choose to start their payouts anytime between the ages of 65 to 70, instead of starting to receive payouts once they turn 65. The delayed starting age of the payouts should result in members receiving a payout boost.
The payouts will automatically start once members turn 70 if they have not chosen their payout age by then.
Dr Tan also assured members that there will be no changes to the rules for lump sum withdrawals of CPF savings.
There will also be a refinement to the relevant tax relief and top-up limit rules to the CPF system.
The tax relief for both the Retirement Sum Topping-Up scheme and the Voluntary Contributions to MediSave Account scheme will be aligned from 1 January 2022.
The tax relief for both schemes will be given to the giver instead of the recipient of the contributions and top-ups.
Additionally, the givers will enjoy an annual tax-relief cap of $8,000 when they make cash top-ups to their own CPF accounts and another $8,000 when they do so for their loved ones, up from $7,000 previously.
The amendments to the CPF law will also allow rightful claimants to receive CPF bequests more easily and quickly.
To expedite disbursement of CPF assets to nominees, the duration monies are retained will be shortened to six months after the members’ passing, from April 2022.
For faster disbursement, discounted Singtel shares will be liquidated and auto-disbursed six weeks after the members’ passing.
“I want to reassure members that if the CPF Board subsequently learns that a dormant member is alive, the [CPF] Board will restore the monies to the member’s original accounts with interest,” said Dr Tan.
Dr Tan also reiterated that there will be no change to CPF beneficiaries’ right to make claims at any time.
Meanwhile, Labour MP and NTUC Director Yeo Wan Ling welcomed the auto top-up function in the RA from the OA and SA as it streamlines the decision-making process and improves accessibility for retirees.
“It takes conscientious effort to maintain and keep track of one’s own bank account, and this is especially the case for our senior citizens. In our pursuit of the bigger, better, and faster, Singapore has rapidly morphed herself into a Smart Nation. The flipside of which is that we risk detaching some of our citizenry as we shed the cocoon of a developing nation.
“The auto top-up mechanism streamlines the decision-making process of many retirees, some of whom could really benefit from this help. I believe this to be an important first step towards a more user friendly and accessible CPF,” she said.
She also affirmed the simplification of language of the CPF Act to make it more approachable and effective.
Labour MP and NTUC Assistant Secretary-General Patrick Tay stood in support of the amendments to the CPF Act.
However, Mr Tay also sought clarification from the Government from an employment perspective, touching on the Contribute-As-You-Earn (CAYE) scheme for self-employed persons.
The scheme helps self-employed persons contribute to their MediSave as they earn.
Mr Tay asked if the Government would consider expanding the CAYE scheme to the private sector as it currently only applies to public sector contracts.
“If expanded, it would help more freelancers, particularly those who render services to companies in the private sector, keep up with their Medisave contributions and provide greater financial protection against health issues,” said Mr Tay.
Mr Tay also asked the Government if there were circumstances that would allow self-employed persons to opt out of the CAYE to allow them to tide over the COVID-19 pandemic.
“As this House would know, the COVID-19 pandemic has had a decimating effect on the lives and livelihoods of self-employed persons. With the circuit breaker measures that were implemented last year, together with the existing restrictions on social gatherings, the events and performing arts sector has almost come to a standstill. Their current earnings are a far cry from their earnings prior to the pandemic,” he said.
Mr Tay also asked the Government to consider having service buyers make CPF contributions for self-employed persons, as the lines between employees and self-employed persons are increasingly blurred.
“What I am proposing is one step further – that the service buyers from both the public sector and private sector make additional contributions to the self-employed person’s CPF account; which mirrors the employer’s CPF contributions under normal employment relationships,” said Mr Tay.
He added that if his recommendations are accepted, service buyers would be making CPF contributions consisting both the SEP’s portion under the existing CAYE scheme, as well as additional sums being the service buyer’s contributions.
