S$211 million in CPF money left unclaimed over the last six years; will more CPF members die before spending their hard-earned monies?

A total of S$211 million has been left unclaimed with the Insolvency and Public Trustee’s Office (IPTO) over the last six years, largely made up of Central Provident Fund (CPF) money. The monies were left behind by people who died with no benefactor nominated.

The IPTO received S$63.2 million of unnominated CPF money last year alone, belonging to 3,450 individuals.

That’s a lot of money left unclaimed. The question is, why?

In January, we published a letter sent in by Zol who highlighted the issue he was having with adjusting his CPF payouts to match his needs.

The 65-year old, who is married with no children, said he received a letter from CPF informing him to either apply for a monthly retirement payout at 65 years old or delay it until he is 70 for a higher payout sum. Mr Zol was expecting this.

However, he was surprised to find out that CPF had calculated his monthly payouts to last 28 years.

Mr Zol wrote, “the one thing that shocked me was that I could only receive $482 monthly from June 2019 under the CPF Retirement Sum Scheme, and this payout would last about 28 years, when I would be 93 years old.”

He explained that he wrote to CPF to request for a 20-year payout instead which would mean a higher payout that will last until he is about 85. Mr Zol based this on the average life expectancy of Singaporean as reported in the media of 85.4 years.

Recent statistics from the Immigration and Checkpoints Authority’s (ICA) Registry of Births and Deaths support Mr Zol’s estimate, or rather it is even lower. In 2017, a report by the ICA showed the average age at death for Malays is 70.6 years while for Indians and other ethnic groups, it is 69.5 and 65.9 years respectively. The average age of the Chinese stands at 78.

This shows that, on average, ethnic minority Singaporeans do not live to the age of eligibility for automatic CPF monthly payouts, they won’t get to use their CPF monies in their lifetime.

Unfortunately, CPF merely rejected Mr Zol’s request, citing ‘current policies’ as the reason’.

“And we members were never consulted,” said Mr Zol, referring to the CPF policy.

“However, if you search the CPF website on “CPF-Your Assurance in Retirement”, this article states that “…. you can choose your desired amount of monthly payouts to meet your retirement needs…”

Indeed, the CPF website does say that a member can choose their desired amount of monthly payouts to meet their needs

Mr Zol lamented, “As I am married with no children, I need to support myself from now till death. If I cannot 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?”

He went on to comment that the 4% CPF interest may not even cover inflation and the progressive increase in GST in Singapore.

“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,” says Mr Zol.

He goes on to say, “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.”

Anticipating the rebuttal that the government is merely looking out for its citizens and want to ensure that they have a steady income in their old age, Mr Zol argues that even if he does use up his CPF retirement sum by the time he is 85, he can sell his 5-room flat to support himself without external financial help.

Mr Zol’s predicament is understandable and the points he raised are worth noting. Since CPF is essentially the hard-earned savings of each individual, shouldn’t they be able to decide on their own payout amounts and period?

As given that Mr Zol has no children, as he says, who would he nominate to receive his CPF savings should he pass on before he uses it all up? Would it then end up in as part of the unclaimed sum under the Public Trustee’s Office (PTO)?

What happens to unclaimed CPF monies?

Now, by default, CPF monies of a deceased person will go to anyone they have nominated as a beneficiary. However, if no one has been nominated, the monies will be transferred to the PTA for distribution to their family members under the Intestate Succession Act or the Inheritance Certificate (for Muslims).

According to Section 7 of the Act, the spouse and children get top priority for inheriting the money followed by parents, siblings, grandparents, and finally aunties and uncles.

Lawyers whom The Straits Times spoke to said that the amount of unclaimed CPF monies is likely to rise as the population ages and family sizes shrink.

“I do foresee this sum growing, particularly given the rise in the number of elderly folk living alone. More Singaporeans may choose to remain unmarried and so more people may not see the need to make a nomination or simply do not have the time to do it,” said Ms Norhakim Shah, a senior associate at I.R.B. Law.

Associate director of PKWA Law, Ms Charlene Nah, told ST that small family units which have experienced successive deaths in a short period of time could also account for the increase in unclaimed CPF monies as beneficiaries die before they can claim the CPF monies.

The question of what PTO does with the unclaimed monies was raised in Parliament on 4 November. Senior Minister for State Edwin Tong said that PTO will contact individuals who are known to possibly have an interest in a deceased member’s unnominated CPF monies, inviting them to make an application to claim those funds.

These are people who either approach the CPF Board to inform them of the deceased’s passing, those listed as the death informant in ICA records, and family members of the deceased as reflected in ICA’s records.

According to Mr Tong, PTO managed to distribute 88% of unnominated CPF monies over the last five years.

He added, “As at end 2018, unclaimed, unnominated CPF monies make up 132 million of the 211 million of unclaimed monies held by PTO. PTO continues to make efforts to locate the legally entitled beneficiaries of unclaimed monies and they do so by making phone calls, writing to them in several occasions, and also in some cases making house visits.”

He then encouraged individuals who may be legally entitled to the money to submit their application, noting that there is no time limit. People can come forward at any time to make their claim.

Mr Tong also explained, “To ensure that the monies are distributed to the rightful applicants, PTO requires that an applicant produce documentary proof to support his claim and also the eligibility entitlement. Where necessary, PTO will assist the applicant to obtain the necessary documents from the relevant agencies by making a request on behalf of the applicant or also supporting the request for information.”

When asked by Non-Constituency Member of Parliament Daniel Goh why some people might end up not making a claim for the monies, Mr Tong said that most people who PTO reaches out to will make the claim. The monies left unclaimed are for those who PTO has been yet unable to trace.

Now, the S$211 million in PTO left unclaimed is for the past six years only. TOC reached out to the Ministry of Law on 22 October to ask what was the unclaimed amount in previous years but have yet to receive a reply.

The question is, will Singaporeans end up dying before they are able to spend their CPF monies? And will they know where that money goes in the event of their death, especially given that many like Mr Zol do not have beneficiaries to nominate?

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