Central Provident Fund (Amendment) Bill – Speech by Png Eng Huat

(Delivered in Parliament on 6 November 2017)

Mr Speaker.  Each time the CPF Act is tweaked, lives will be impacted, one way or another.  For many Singaporeans, their dreams and plans for retirement, flat ownership, or even going on a once-in-a-lifetime haj could hinge on the policy directions set by some of these amendments.
As our social security system adapts to changing times, the facts and impact of each amendment to the CPF Act must be made known to affected members in a simple and easy to understand manner.  This is important because, compare to the CPF of yesteryears, the scheme we have today has evolved over time to allow members options to choose the types of retirement plans, or top up schemes to support loved ones, to name a few.  Thus, CPF members today need to make informed choices.
For this purpose, I have some brief clarifications to seek from the Minister on some of key features of this CPF amendment bill.
First, I have some questions pertaining to the proposed amendment made to Section 18 of the CPF Act.  This amendment is to give the Board the flexibility to determine the amount of money standing to a member’s credit in CPF that may be transferred to the RA or SA of a relevant individual.
Although this feature of the 2017 CPF Amendment Bill is touted as a change to strengthen family support by allowing more CPF members to make CPF transfers to their parents and grandparents, the proposed changes to Section 18 of the CPF Act seem to only bring in line the changes made previously, and that is, to allow members to transfer less to their Retirement Accounts if they have sufficient property pledge.
Sir, as it stands today, even without the proposed changes to Section 18, CPF members with sufficient property pledge or charge do not need to set aside the Full Retirement Sum (FRS) in their CPF anymore.  If they can meet the Basic Retirement Sum (BRS), which is half of the Full Retirement Sum, these members can withdraw their remaining CPF savings in cash when they attained the age of 55.  They can then use the cash do a cash top up of the CPF accounts of their loved ones under the Retirement Sum Topping-Up Scheme.  By doing so, some of these members may get to enjoy additional tax relief of up to $7,000 per calendar year, which they would not enjoy if they were to subscribe to the proposed amendment, which is to do a top up via CPF transfer.
Members who qualify to make CPF transfer to their loved ones under the proposed amendment would most likely come from the same group who qualify to make lump sum withdrawal from their CPF accounts in cash after setting aside their BRS and property pledge upon attaining the age of 55.
Would the ministry highlight this tax relief option to the members so that they can make an informed choice, that is, they are better off withdrawing the excess amount standing in their CPF accounts first, then follow up with a cash top up to the CPF accounts of their loved ones later, so as to enjoy some tax relief in the process?  Although there is a personal income tax relief cap from Year of Assessment 2018, the incentive for cash top-up of CPF accounts remains more attractive than direct CPF transfer.  Would the latest amendment to Section 18 become a white elephant since qualified members are better off doing the cash top-up option?
Second, I welcome the proposed amendment to Section 15 to allow members who are or will be receiving a pension, annuity or other benefit approved by the Board, the flexibility to make a withdrawal from their retirement account subject to the payout benchmark specified by the Minister.  The differentiated “payout benchmark” is something new and as stated in the new subsection (8CA), there are different amounts of payout benchmark for different classes of members based on the life expectancy.  I seek more information on how the Board is going to classify these annuitants based on life expectancy.
Finally, behind every policy change lies a number.  Every amendment proposed must surely be motivated by some trending statistics, demands from account holders, or changing social norms.  Specifically, can the Minister share what CPF has found in its big data analytics to derive at the proposed changes found in this amendment bill.  Is the number of elderly Singaporeans with retirement adequacy issues rising despite having children with healthy CPF accounts?   Are there many requests from Singaporeans who want to do CPF top up for their loved ones?  Is CPF encouraging members to borrow from their future retirement needs to pay for the current needs of their loved ones?   Is there any projection done on the retirement adequacy of these members when they grow old if they were to top up the CPF accounts of their loved ones today.
Beyond providing options to the CPF system, I hope the ministry can help CPF members make informed choices towards planning for their own retirement adequacy.