By Leong Sze Hian

I refer to the report “Govt to explore ways to increase use of CPF for buying HDB flats” (Channel News Asia, Mar 27).

One possible implication or policy change may be this: cash profits from the sale of HDB flats may have to be kept in one’s CPF account, and cannot be cashed out.

The possible implications of such a change may be as follows:-

– HDB prices may crash when people realise that no cash profits can be made

– Home buyers may prefer private property compared to HDB flats

– Those who subscribed to the asset enhancement policy may find that they have put all their eggs into one basket (HDB), and can no longer be monetised before retirement

Will HDB flat-owners only be able to monetise their HDB flat at age 55, 65?

What portion of the cash profits from the sale of HDB flats will be locked up in the CPF?  All? 50 per cent?  Will interest that would otherwise have been earned from the cash utilised be allowed to be cashed out?

At the current rate of increase of $15,500 per annum for the CPF Minimum Sum and Medisave Required Amount, the total at age 55 is projected to be $197,000, $352,000 and $507,000, in 2013, 2023 and 2033 respectively.

So, if you sell your HDB flat, but have less than $352,000 when you turn 55 in 2023, does it mean that you can only draw $5,000 at age 55 (unless you have property to pledge for up to half the Minimum Sum), with the balance payable as a monthly life annuity from age 65 under the CPF Life scheme?

Five things to note

With the recent CPF changes and the expected changes, there are 5 things that you may need to know before you turn 55.


Upon reaching 55, if your CPF Special Account (SA) plus property pledge, is insufficient to meet your CPF Minimum Sum (MS), which is currently $117,000, your CPF Ordinary Account (OA) balance will be transferred to your CPF Retirement Account (RA) to make-up for the MS shortfall.

What this means is that you may no longer be able to use your OA balance to pay for your home mortgage.

So, if you are affected by this policy, use your entire OA balance to re-pay your mortgage before you turn 55.


If you plan to downgrade to a smaller flat, the sales proceeds (CPF utilised and accrued interest) of your flat will also be transferred to your RA, if you have a MS shortfall.

What this means is that after setting aside the MS, you may have less available from your flat sale proceeds to pay for your smaller downgrade flat.

So, if you want to downgrade, do it before 55.


Upon reaching 55, your OA and SA that is transferred to your RA to meet the MS, can no longer be invested.

So, if you want to invest your OA and SA, do it before 55. (note: first $20,000 of OA and $40,000 of SA cannot be invested.)


For those age 55 and younger from 2013 onwards, CPF Life will be compulsory.

So, if you plan to migrate, give up your Singapore citizenship, and want to withdraw your entire CPF as a lump sum, you should try to do so before 55.

Otherwise, only the surrender value of your CPF Life (depending on which of the 4 plans you choose) may be given to you. If you plan to migrate, choose the CPF Life Basic plan as it gives  the lowest monthly annuity payout with the highest residue value.


When the OA is transferred to the RA to meet the MS at age 55, the OA also can no longer be used to pay for one’s own or children’s tertiary education fees.


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