Partial CPF Withdrawals: Why its not a good idea

Partial CPF Withdrawals: Why its not a good idea
- The Straits Times, 21 March 2009

Mr Gary Chua ("Middle class and squeezed: Allow partial CPF withdrawals now”, 13 March) and Ms Doris Tan (“Partial CPF withdrawal will make a big difference”, 7 March) have suggested that partial CPF withdrawals be allowed during this downturn.

2.   CPF savings are meant to help Singaporeans with their housing, medical and retirement needs. Most CPF members have not yet accumulated sufficient savings to meet these basic goals. Allowing CPF withdrawals for other purposes will make it even harder for members to do so.

3.   It is easy to talk about allowing partial withdrawal of CPF, subject to restrictions. But once we break the piggy bank, the temptation to draw more and more from it will become irresistible. We then put at risk the long term security and well-being of CPF members.

4.   The Government has introduced substantial and focussed measures to help Singa¬poreans see through the economic crisis. These include the Jobs Credit scheme, the Skills Programme for Upgrading and Resilience (SPUR) and the Professional Skills Programme (PSP). These measures will help workers hold on to their jobs or retrain and find new ones. The Government has also given rebates on individual taxes and GST, and on service and conservancy charges, to render more direct help to Singaporeans, especially the lower income groups but also including middle-income families like Mr Chua.

5.   These measures are taking effect. The Government will closely monitor the global and domestic situations. If it becomes necessary, we have the means to render further help to Singa¬poreans, and the will to do so.

Middle class and squeezed: Allow partial CPF withdrawals now
- The Straits Times, 13 March 2009

My wife and I are in our late 40s and live in a paid-up five-room HDB flat. We are still working and have a few hundred thousands dollars in our Central Provident Fund (CPF) Ordinary and Special accounts.

We will also have a six-figure insurance payout on maturity when we reach 65 years of age. With the guaranteed amount from the compulsory insurance taken via the CPF when we are older, we have enough set aside for our retirement.

However, the issue that worries us is taking place now, not when we reach 55.
Whatever take-home pay we earn now is barely enough to meet family expenses for ourselves and our two children. Needless to say, we have little or no savings at all. I believe that there are many more people like us, at the lower end of the typically squeezed middle-income group.

We do not qualify for many government handouts. Our salary increments, whenever we have them, do not keep up with the pace of inflation. We need more money now, and not when we are 55.

The irony is that when we withdraw our CPF savings at age 55, we may not have urgent need for the payout as our children will probably have finished their education and joined the workforce.

It is time for the CPF Board to consider allowing eligible members who have healthy balances, and who are currently not using their CPF savings, to withdraw a small part of their savings before the age of 55.

The CPF Board can regulate this policy with certain conditions, for example, allowing members to withdraw a certain percentage of CPF savings before then. Members should also have more than enough funds to meet the mandatory Minimum Sum, or must not have to service heavy loans using their CPF savings. The CPF Board can also consider allowing members to withdraw their savings in the form of a loan with principal sum and interests paid into their own accounts.

The Government tells us regularly to make adjustments and changes to adapt to current conditions or to keep up with the times.

To my best knowledge, the CPF Board has not made as many changes to its policies. If the current economic situation is not the right time, then when is?

Partial CPF withdrawal will make a big difference
- The Straits Times, 07 March 2009

With the recession raging, many Singaporeans have been retrenched and are struggling to make ends meet. For those who have CPF funds in excess of the Minimum Sum, would the Government allow early withdrawal of excess CPF funds? Any withdrawal would help them get on with their lives. It would enable them to pay their utilities, medical expenses, children's educational expenses as well as any outstanding loans, which would otherwise incur heavy interest and late charges.