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CHANGES TO CPF REFUND UPON SALE OF PROPERTY BY MEMBERS AGED 55 AND ABOVE

News Release by:
Central Provident Fund Board

18 September 2008 --

During the Budget Debate in March 2007, the Minister for Manpower announced that from 1 January 2009, CPF members aged 55 years or older who sell their properties are required to refund the CPF moneys used in buying the properties to make up the Minimum Sum. This is to help members build up the Minimum Sum to meet their retirement needs.

The CPF Board would like to remind members of this change to allow those intending to sell their properties sufficient time to make the appropriate financial arrangements.

Currently, members aged 55 and above1 need to refund the property pledge amount with accrued interest, if they have pledged their properties for part of the Minimum Sum. Members who have not pledged their properties for part of the Minimum Sum are not required to make any refund upon sale of their properties.

From 1 January 2009, members who sell their properties that have been purchased with their CPF savings are required to refund the sale proceeds2 to make up the Minimum Sum, up to the amount of the CPF savings that had been withdrawn and the interest that would have been earned on the withdrawn savings.3

Some examples showing the amount refundable under the new rule are given in Annex A.

1 Members who sell their properties before age 55 are required to refund the CPF moneys withdrawn for the purchase of their properties with accrued interest upon the sale. There will be no change to this rule.
2 The sale proceeds that the CPF member can realize depends on whether CPF Board’s charge on the property ranks before or after the bank. If the bank has first charge, then the sale proceeds to be used for refund will be the net amount after settling the outstanding bank loan. If the Board has first charge, the sale proceeds would be used for the required CPF refund first.
3 The refund amount is capped at the difference between the member's Minimum Sum and his Retirement Account balance (excluding interest earned).

Contact Information
Information on the change to the refund rules from 1 January 2009 can be found at the CPF website (www.cpf.gov.sg). Queries can also be addressed to CPF Board via

Annex A

ILLUSTRATION OF AMOUNT REFUNDABLE UNDER THE NEW REFUND RULE
FOR MEMBERS AGED 55 AND ABOVE

Example 1
Member X is 58 years old and intends to sell his property.

(a) Member’s Minimum Sum $90,000
(b) Balances in Retirement Account (excluding interest earned) $30,000
(c) Property pledge plus the accrued interest on the pledge $51,000
(Property was pledged for $45,000 at age 55)
(d) Principal CPF withdrawn for the property plus the accrued interest $100,000

If he sells his property before 1 January 2009, he has to refund the property pledge plus the accrued interest on the pledge of $51,000 to his CPF Retirement Account (RA).

If he sells his property on or after 1 January 2009, he has to refund $60,000 [i.e. (a) – (b)] to his RA to meet his full Minimum Sum.

Example 2
Member Y is 60 years old and intends to sell his property. However, he has used less CPF moneys for his property, and has pledged his property for a lower amount.

(a) Member’s Minimum Sum $80,000
(b) Balances in Retirement Account (excluding interest earned) $30,000
(c) Property pledge plus the accrued interest on the pledge $39,000
(Property was pledged for $33,000 at age 55)
(d) Principal CPF withdrawn for the property plus the accrued interest $37,000

If he sells his property before 1 January 2009, he has to refund the property pledge plus the accrued interest on the pledge of $39,000 to his RA.

If he sells his property on or after 1 January 2009, he only needs to refund $37,000 [i.e. (d)] to his RA. This is because while he needs another $50,000 [i.e. (a) – (b)] to meet his full Minimum Sum, he has only withdrawn $37,000 (including accrued interest) from his CPF for the property.

Members who had attained the age of 55 before 1 July 1995 will not be affected by the change in the refund rules that will take effect from 1 January 2009.

 

 Last Updated on: Thursday, June 30, 2011 at 5:48 PM
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