Lower CPF Withdrawals From Jan 1

The amount that Central Provident Fund (CPF) members can withdraw from their accounts or use for buying property will be cut further from the start of next month.

People aged 55 and above will have to set aside $11,500 as the required amount in their Medisave accounts. This is up from $8,300 now.

The withdrawal limit for those using CPF to pay for housing will also be cut to 126 per cent of the property’s purchase price or valuation, whichever is lower. This is down from the current 132 per cent.

The CPF Board said yesterday that the changes are to ensure that members have enough savings left for retirement and health care in their old age.

The required amount is the minimum sum that a CPF member aged 55 and above needs to keep in his Medisave account.

This is on top of the minimum sum of $94,600 that the CPF requires members to have in their Ordinary and Special accounts.

The Medisave required amount was first set at $2,500 in 2004. It will increase every year by a value equivalent to $2,500 in 2003 dollars, until Jan 1, 2013, when it reaches a value equivalent to $25,000 in 2003.

The upcoming increase works out to $3,200 after adjustment for inflation.

These rules apply to CPF members over 55, as that is when they are allowed to withdraw money.

The housing withdrawal limit was introduced in 2002, at 150 per cent of valuation limit - which is the property’s purchase price, or the amount it is valued at, whichever is lower.

It will be lowered every year by 6 percentage points, until it is 120 per cent of the valuation limit on Jan 1, 2008.

Source : Straits Time - 20 Dec 2006