Key CPF/HDB changes to help retirement

During yesterday's National Day Rally,  PM Lee highlighted a few key changes to the existing CPF system.

1)  CPF members reaching 65 will be allowed to withdraw a lump sum from their Minimum Sum savings if they need. There will be a limit, perhaps 20%, to ensure that there is still sufficient savings left for their later years.


2)  The Government will be launching the Silver Support scheme to give lower-income Singaporeans with little or no CPF savings an annual bonus from the Government. Details to be announced.

3)  CPF minimum sum scheme will be raised to $161,000 from the current $155,000 on 1 July next year.

4)  Minimum sum scheme is here to stay. However beyond the increase next year, PM Lee sees no need for further major increase.

5)  An advisory panel set up by the Ministry of Manpower will study a range of retirement issues such as how the Minimum Sum should be adjusted to provide adequate retirement payout, or how CPF savings can be invested more widely.

6)  HDB’s Lease Buyback Scheme will be extended to 4-room flat owners. The scheme currently allows 3-room flat owners to sell a part of their 99-year lease to the Government in return for a monthly income. This will help to provide an additional income stream for retirees.

These are all wonderful enhancements to the existing system to help ease the financial burdens of retirement. Ever since CPF LIFE was launched, many of my clients have expressed their unhappiness over being unable to access the CPF savings they have accumulated over so many years.

With these initiatives in place, especially with HDB Lease Buyback Scheme extended to 4-room HDB owners, retirees have more financial security, knowing that they have the option of monetising their home if the need arises.

Of course, these Government measures will not be able to provide one with a luxurious retirement lifestyle. There is no way that a retiree can go on a round-the-world trip with these funds. The objective of the CPF scheme is to provide members with sufficient funds to live and get by - that's all.

To truly enjoy your golden years, it is important to save and invest your cash savings. Those people who complain about the CPF being insufficient to meet their retirement needs probably did not set aside much of their own retirement fund, over relying on the Government, and that is the reason they are complaining.

Those who are self sufficient in their retirement do not need to rely on Government handouts because they have been diligent in saving and investing their surplus cash-flow over many years to build a retirement nest egg that they can fully enjoy.

In fact I highly recommend everyone to save at least 10-20% of their surplus cashflow to invest for their retirement.

Contact a well-qualified financial planner to help you plan for your dream retirement today.

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