Right form to be used or your money goes to nominees’ CPF

By SY Lee and Leong Sze Hian

Thanks to a recent posting on facebook, we discovered that you can now choose to pay your CPF to your nominees’ CPF on your demise, instead of as the normal cash to your nominees.

It is called the Enhanced Nomination Scheme (ENS) that has been available since 1 January 2011.
But was this ever reported in the media?
Under the ENS, there are 2 options for you to choose.
Option 1 – You can choose to credit your CPF on your death to your nominees’s Special and Retirement Accounts first (up to the prevailing Minimum Sum – currently $148,000), followed by the excess to your nominees’ Medisave Account up to the prevailing Medisave Contribution Ceiling (currently $43,500).
Option 2 – You can also choose to credit your nominees’ Medisave Account first, followed by the excess to the Special and Retirement Accounts.
Restrictions on the use of CPF?
One should note that the Special Account cannot be used for anything. In other words – your nominees may arguably only get to use it if they have met the prevailing Minimum Sum (currently $148,000) and Medisave Required Amount (currently $40,500) at age 55, or as part of their monthly CPF Life annuity payout from age 65.
As to the Medisave Account – it can only be used to pay for approved medical insurance, Eldershield premiums and approved medical expenses.
So, do you really want to put all these restrictions on how your nominees can use your CPF when you die?
Only retirement and healthcare needs matter?
As I understand that the primary objective of the ENS, is to enable CPF members to provide for their nominees’ retirement and healthcare needs. So why is the Ordinary Account excluded from the scheme?
Are we perhaps saying that nominees’ housing, education, dependents’ protection scheme premiums, home (mortgage) protection scheme premiums, etc, are not important at all?
Why not let the CPF member decide, instead of restricting it to the Special/ Retirement and Medisave Accounts only?
So understand the implications of your choice of option and make sure you don’t use the wrong CPF nomination form!