Frustrated retiree seeks answers about his savings and monthly payouts, but stonewalled by CPF board

The retired Singaporean man, Zol who wrote a letter to express his dismay over the moving goalposts of the CPF scheme, has been stonewalled by the Central Provident Fund (CPF) board after he raised questions as to whether CPF monies belonged to the CPF members and who decides the sum and term of the CPF retirement payout.

In his earlier letter published on TOC,  he was told by that he could only receive $482 monthly from June 2019 under the CPF Retirement Sum Scheme, and this payout would last about 28 years, when he would be 93 years old.

In his letter, Zol wrote, “How can the Central Provident Fund Board decide on the terms of payment for my own money? I would like the Finance Minister to clear the air – does CPF savings belong to each individual member?”

He also questioned the length of the payment and the monthly amount that he would be getting.

“As I am married with no children, I need to support myself from now till death. If I can not secure a job from now till 70 years old, what do I survive on during this 5-year period if I opt in at 70 years old? On top of this, the 4% interest may not even cover inflation in Singapore and the progressive increase in GST for now is 7% to 9%. If using present value to evaluate the 2 options (ie. start the plan at 65 or 70 years old), the best decision is to withdraw all my CPF money now.

In light of my situation (ie. married with no children), it is totally illogical to suggest a payout term of 28 years. When my wife and I pass on, there is no one to receive my balance payout.”

In an attempt to address the problem that he is facing, Zol recently wrote to the CPF board to request for his payout duration to be shortened so as to receive higher monthly payouts.

In his email to CPF, he quoted Minister for Manpower Josephine Teo saying “that of those CPF members who are receiving their payouts presently, 74% of them receive under $500” and that she also stressed that there is “tangible benefits” for members when payouts start later, like higher interest.

As such, he also questioned if CPF could help to “work out tangible benefits – like increase in value of average monthly payout to be more than $450 – for CPF members in the age band between 65 -69”.

As a respond to his first email sent out on 14 January (Monday), CPF replied and said:

Under the Retirement Sum Scheme, members who turned 55 between 1 January 2009 and 30 June 2009, like yourself, are required to set aside their cohort Full Retirement Sum (FRS) of $106,000 in their Retirement Account (RA) (excluding interest earned) for basic retirement needs.

Members who meet their cohort FRS fully in cash at age 55 will be able to receive their cohort FRS payout of $910 from their payout eligibility age (PEA) for approximately 20 years, based on the RA base interest rate of 4%. Otherwise, for members who are unable to set aside the FRS fully in cash will receive a pro-rated payout rate, subject to a minimum amount of $250. In your case, you will receive a pro-rated payout rate of $482 for about 28 years.

Notwithstanding, the resulting payout duration may also vary from 20 years due to new policies introduced, which are shown below for your quick reference:-

Extra Interest (EI): An extra 1% per annum on the first $60,000 of a member’s combined balances [with up to $20,000 from Ordinary Account (OA)]

Additional Extra Interest (AEI): CPF members aged 55 and above, like yourself, will also earn an additional 1% extra interest on the first $30,000 of their combined balances (with up to $20,000 from OA)

The EI and AEI is used to extend the duration of the RSS payouts, capped at end-age 95. This will also help to extend the duration of members’ payouts to ensure that they do not outlive their retirement savings as much as possible.

In view of the above, we’re unable to adjust your monthly payout to last for 20 years as it will deplete your RA savings prematurely. Generally, you would need to receive substantial top-ups in your RA or defer the start of your monthly payouts to be eligible to receive higher payouts and/or shorter payout duration.

CPF also noted that they understand Mr Lee’s concern on CPF savings and monthly payouts, and will get back to him after carefully reviewing his case.

However, no reply from the board was received to date.

In his follow-up emails to the board for answers, he asked “who are the rightful owners of CPF savings”?

Zol noted to the CPF board that Nominated Member of Parliament Chia Yong Yong once said in Parliament in March 2015 that CPF is not the members’ money, and PM Lee had commended the speech as excellent. However, a year later, then-Minister of Manpower and the current Speaker of Parliament Tan Chuan Jin, assured Singaporeans that CPF is indeed their money.

With the two examples, Zol sought clarification from them as to which statement is true.

Other than the above question, he also demanded to know “who decides and approves the sum and term of the Retirement payout” and what is the rationale behind it.

He noted that in CPF’s website, it is said that one can choose their desired amount of monthly payouts to meet their retirement needs.

However, that is obviously not the case with Zol as CPF told him that he will only be able to receive “a pro-rated payout rate of $482 for about 28 years” as he is unable to set aside his cohort Full Retirement Sum (FRS) of $106,000 in his Retirement Account (RA).

As a man who has no children of his own, Zol said that it is tough for people his age to have a full-time job and his monthly retirement sum can only support partial of his expenses, especially medical bills.

And Zol continues to wait for the replies to the questions as CPF board continues to give him the silent treatment.


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