REMINDER ON CPF CHANGES FROM 1 JANUARY 2004
	News Release by: Central Provident Fund Board 27 DECEMBER 2003 --
	The Government first announced changes to CPF in July 2002 and later in August 2003. Some have been implemented on 1 October 2003. The following will take effect from 1 January 2004:
	LOWER SALARY CEILING The salary ceiling will be reduced from $6,000 to $5,500 on 1 January 2004. This is to give high-income earners greater flexibility in managing their finances, including their retirement needs. It also reduces the compulsory savings for this group of workers and lessens the burden on employers. The next change will take effect on 1 January 2005, when the salary ceiling will be further lowered to $5,000. From 1 January 2006, it will be lowered to $4,500.
	LIMIT ON VOLUNTARY CPF CONTRIBUTIONS As announced previously, the limit on voluntary CPF contributions will be lowered from 1 January 2004. The new limit (mandatory and voluntary) will be $23,760 compared to $28,800 in 2003. This means that in 2004, no voluntary contributions will be allowed if the mandatory contributions exceed $23,760. If the mandatory contributions are below $23,760, voluntary contributions can be made up to the difference between $23,760 and the amount of mandatory contributions.
	ADDITIONAL WAGE CEILING As announced previously, the Additional Wage Ceiling will be revised. The maximum amount of wages that will attract CPF contributions in 2004 will be $93,500. The maximum Additional Wages that will attract CPF is the difference between $93,500 and the total ordinary wages subject to CPF contributions for the year.
	TAX DEDUCTION LIMIT FOR THE SELF-EMPLOYED The tax deduction limit for the self-employed will also be revised following the change in the salary ceiling. The revised tax deduction limit from 1 January 2004 will be $21,780 (i.e. 33% x 12 x $5,500).
	MEDISAVE CONTRIBUTIONS FOR THE SELF-EMPLOYED From 1 January 2004, the maximum amount of compulsory Medisave contributions payable by the self-employed for the year will be adjusted, following the change in the salary ceiling. Please refer to the table below for the maximum Medisave contributions payable for 2004.   Period Age Below 35 years 35 to below 45 years 45 years and above Jan – Dec 2004 6% x 12 x $5,500= $3,960 7% x 12 x $5,500= $4,620 8% x 12 x $5,500= $5,280
	MEDISAVE MINIMUM SUM From 1 January 2004, CPF members who meet the CPF Minimum Sum will have to set aside $2,500 in their Medisave accounts when they make a CPF withdrawal. If their actual Medisave balance is less than $2,500, they will have to transfer their Ordinary/Special account balances, upon withdrawal, to meet the Medisave Required Amount.
	HOUSING WITHDRAWAL LIMIT From 1 January 2004, the cap on the CPF withdrawal limit for the purchase of private residential properties and HDB flats financed with bank loans will be reduced from the current 150% to 144%, and thereafter cut by 6 percentage points every year to reach 120% on 1 January 2008. This is to encourage prudence in using CPF savings to buy a house so that members will have enough savings in their CPF accounts to meet their retirement needs.
	2% CASH DOWNPAYMENT A 10% cash down payment on HDB flats financed with bank loans will be phased in at 2 percentage points per year over five years, starting from 1 January 2004.
	PUBLIC ENQUIRIES For more details, please log on to the CPF website or call the CPF hotlines. For matters pertaining to:  Lower Salary Ceiling  Limit On Voluntary CPF Contributions  Additional Wage Ceiling (1800-2263877 code 1)  Tax Deduction Limit for the Self-Employed  Medisave Contributions for the Self-Employed (1800-2263877 code 2)  Medisave Minimum Sum (1800-2271188 code 5)  Housing Withdrawal Limit [1800-2271188 code 2-2 (Public Housing Scheme) and code 3 (Residential Properties Scheme)]  2% Cash Downpayment (1800-2271188 code 2-2)