Kaeden Ong

Some seniors allowed to use CPF Retirement Account for housing

Posted by Kaeden Ong on 27th July 2014 in Blog

Manpower Minister Tan Chuan-Jin said the government has been flexible, “where a case merits it”, in allowing the CPF Retirement Account (RA) to be used to repay housing loans, reported the media.

In fact, out of 10 people aged 55 and above, only one is still using CPF savings to pay the monthly instalment for his or her home, while only one in 20 may need to top up his monthly instalment with cash from their own pocket.

Mr Tan made the statements in parliament in reply to queries on flexibility in using CPF savings for housing.

CPF rules states members turning 55 should place at least half of the specified Minimum Sum into their RA, prior to using their remaining savings in Ordinary Account to repay housing loans.

However, about 500 request are made each year from members aged 55 and above who want to use their RA savings to make mortgage payments, despite a shortfall in their Minimum Sum.

Mr Tan revealed that about two-thirds of these requests are approved.

“For cases that are not approved, we work closely with HDB to explore alternative financing or housing options for the CPF member,” he explained.

However, he added it would not be ideal to make it automatic for those with less than half the Minimum Sum to continue using their CPF for housing because some are able to pay their housing loans with cash instead of drawing on their RA savings. This move would lower their future monthly payouts.

“We also do not want to encourage rash and imprudent housing purchases by members who think they can automatically draw down fully on their Retirement Account funds to service their loans,” Mr Tan said.

Credits: Property Guru

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