At the National Day Rally 2019 yesterday (18 Aug), Prime Minister Lee Hsien Loong took the opportunity to lash out at fake news circulating on social media, saying that government would be changing withdrawal policies of the Central Provident Funds or CPF withdrawal ages.
In the script published on PMO’s website, PM Lee said, “Let me add one last point here, to be absolutely clear: we are not making any changes to CPF withdrawal policies or CPF withdrawal ages. You can still take out some money at age 55. And you can still start your CPF payouts from age 65.”
“All that remains exactly the same. So please ignore any rumours you may hear about this, or messages on WhatsApp, because they are fake news!”
On national TV yesterday, however, he added the following warning, “Please delete it and tell your friends. Don’t share it with more friends and confuse people because that would be fake news.”
“POFMA would catch you!” he added.
The members of audience were seen clapping.
CPF Minimum Sum keeps changing
While CPF withdrawal ages are not changing, PM Lee, however, neglected to say in the rally that the CPF Minimum Sum continues to increase year after year.
The Minimum Sum (or Full Retirement Sum) is the mandatory amount of retirement savings which one has to set aside in his or her Retirement Account for the CPF LIFE annuity scheme. After setting this amount aside, the CPF member can then withdraw any money left (in Ordinary Account) at 55.
The member can opt for half of Minimum Sum (or Basic Retirement Sum) to be set aside if he or she has a house to pledge but the member would be receiving less annuity payouts at 65.
As can be seen on CPF website, the Minimum Sum has been increasing year after year:
Note that the new Minimum Sum has not been announced for those who turn 55 after 2020 but based on the above table, one can see that it would likely be even more than the amount in 2020.
In fact, from the above table, the average increase in Minimum Sum per year is about $6,300. So, at this rate, by 2040, the Minimum Sum would calculate to be $307,000!
It was revealed by Minister of Manpower, Josephine Teo last year in Parliament that only 53% in the 2016 cohort of those in 55 years old, met their minimum sums, leaving 47% unable to do so.
As the Minimum Sum increases, more of those in the future generations of Singaporeans would likely not be able to withdraw their CPF funds at 55. Hence, it doesn’t matter if the withdrawal age of 55 is changed or not.