Tuesday, August 28, 2018

About 6 in 10 withdraw CPF savings when they turn 55: CPF Board

By Jeremy Lee

28 August, 2018

SINGAPORE — About six in 10 members (58 per cent) aged between 55 and 70 have withdrawn cash from their Central Provident Fund (CPF) savings since turning 55. The median amount withdrawn was S$9,000, and the average amount was $33,000.

Releasing an analysis of CPF withdrawal trends on Tuesday (Aug 28), the CPF Board said the information was obtained from a Retirement and Health Study involving face-to-face interviews with 7,200 members aged between 55 and 70.

The survey was conducted to find out what CPF members did with their funds, if they cashed them out. Under existing rules, when CPF members turn 55, they may withdraw part of their CPF savings in a lump sum.

Those who made cash withdrawals do so for three main purposes:

More than half (51 per cent) left the funds with banks and finance companies, without using them specifically, as there was no immediate need. The median amount deposited was S$8,000.

The second-biggest group (40 per cent) used the cash for household expenses and to pay off loans. These respondents had more children on average compared with those in the other groups, and some spent the withdrawals on their children's education. The median amount used for household expenses was S$5,000, and the median amount used for loan payments was S$6,000.

About 20 per cent used the funds to pay for big purchases like vacations or home renovations. Notably, a larger proportion of these individuals were still employed when they took the survey, compared with the other groups. The median amount used for overseas vacations was S$5,000, and the median amount used for home renovations was S$10,000.

Of the four in 10 CPF members who chose not to withdraw their savings, the CPF Board said they may have done so to enjoy higher CPF interest rates compared with those from banks.

It advised members to consider the trade-off between withdrawing their funds to meet current needs and leaving them in their CPF accounts to accumulate interest.

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