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Oral Answer by Mr Lim Swee Say, Minister for Manpower, to Parliamentary Question on CPF Education Scheme

Employment practices

Notice Paper No. 81 Of 2016 For The Sitting On 14 Mar 2016 Question No. 157 For Oral Answer

MP: Ms Cheng Li Hui

To ask the Minister for Manpower whether the Ministry will consider allowing parents to use their Retirement Account savings for their children’s full-time subsidised diploma/degree courses at Approved Educational Institutions.

Answer

  1. The CPF Education Scheme allows CPF members to use their CPF Ordinary Account (OA) savings1 to pay for their own, spouses’ or children’s tuition fees for full-time subsidised diploma/degree courses at Approved Educational Institutions.
  2. When members turn 55, a Retirement Account, or RA, is created, and monies from the CPF OA and the Special Account (SA) are transferred to the RA up to the Full Retirement Sum. Members who own a property with sufficient charge2 or pledge3 on the property can withdraw their RA savings4 above the Basic Retirement Sum in cash for any purpose including education. Members who continue to work and make CPF contributions after age 55 will also have fresh OA savings that can be used under the CPF Education Scheme.
  3. CPF members who have insufficient OA savings should consider other avenues to finance the tertiary education of their children. For example, savings in the Post-Secondary Education Account (PSEA), student bursaries and loans offered by MOE and CDC/CCC, or the Tuition Fee Loan Scheme and Study Loan Scheme offered by the Government. There are also various financial assistance schemes offered by the tertiary institutions as well as other community organisations.
  4. We recognise that some CPF members may have tried but do not qualify for these financial assistance schemes. CPF Board has therefore exercised some flexibility by allowing them to use their savings in their RA that originated from their OA for the purpose of the CPF Education Scheme. However, CPF members must recognise that they are compromising their retirement adequacy, especially if their children do not or are unable to repay the loan after graduation.

FOOTNOTE

  1. CPF members can use up to 40% of their accumulated OA savings, including amount withdrawn for education and investment, or their remaining OA balance after setting aside any amounts reserved for housing or other schemes (if any), whichever is lower. The amount that can be used is also subjected to the tuition fees payable.
  2. A property charge is created when a member withdraws savings from his OA to finance the purchase of his property and pay his housing loan instalments.
  3. A property pledge is created when a member withdraw sums in excess of the BRS under the property pledge withdrawal rules.
  4. Excludes top-up monies, government grants and interest earned.