The Central Provident Fund (CPF) Board has been accused of putting half of the funds in a member’s Retirement Account into a CPF Life plan, without his authorisation.
Facebook user Desmond Chua wrote that he came to know that CPF Board had moved half of his retirement savings into CPF Life when he turned 59 years old. He wrote: “…I came to know CPF board withdrew $77,500 for my CPF account to put into CPF life standard and left me with $77,500 in CPF retirement account.”
CPF Life is a ‘life annuity’ scheme, backed by the Singapore Government, under which members will receive a regular stream of income for as long as they live.
Singapore citizens and permanent residents who are born in or after 1958 and have at least 60,000 in their Retirement Account six months before they reach the payout eligibility age (PEA) of 65 years old are automatically enrolled in CPF Life.
Those who are not automatically placed into the scheme can choose to join CPF Life between age 65 and one month before they turn 80 years old.
Once a member has been placed on CPF Life, they can only leave the scheme if they cannot work ever again due to being physically or mentally incapacitated, if they have severely impaired life expectancy, if they lack capacity under the Mental Capacity Act, or if they are set to leave Singapore and West Malaysia permanently.
Malaysians who have left Singapore permanently to live in West Malaysia and those who already have a monthly pension payout and are fully exempted from using their Retirement Account funds can only choose to leave the programme.
If a Singapore citizen or Permanent Resident who is placed on CPF Life does not meet any of these conditions, they cannot opt out of the scheme.
The interest paid under CPF Life also differs from the interest paid under someone’s Retirement Account.
While the savings in a member’s CPF Life scheme will continue to earn the four per cent interest, just like the interest that Retirement Account savings generate, the interest earned with CPF Life will be “paid to the Lifelong Income Fund and pooled together with the interest of all CPF LIFE participants.”
This means that the interest under CPF Life will be paid to members as part of their monthly payouts for as long as they live, but no interest will be refunded to the member or their next of kin if they leave the scheme or pass away.
The only amount members placed in CPF Life can pass on to their next of kin in the event of death is a “refund of the savings used to join CPF LIFE less any monthly payouts you received before leaving.”
CPF Board’s website states: “When you pass away, we will refund any remaining Retirement Account savings along with all your unused CPF LIFE annuity premiums (without interest).”
Mr Chua is unhappy with being automatically placed into the CPF Life scheme.
Calling the automatic arrangement “unfair,” Mr Chua lamented the fact that interest for half of his savings that is under CPF Life will not be paid out to his family in the event that he passes on. He wrote:
“Four years after my 55 year old CPF withdrawal I came to know CPF board withdrew $77,500 for my CPF account to put into CPF life standard and left me with $77,500 in CPF retirement account.
“I was told that the money inside CPF retirement account have interest been paid yearly but the money inside CPF life account will not paid with interest. I told the officer it is unfair that money in my CPF life is without interest. I also ask her what happen if I don’t live till 65 how much my family will get? The reply is just $77,500 plus what you have in the retirement account.
“I ask her if your money put inside the bank and after four years the bank tell you no interest how you feel. Is it fair? She can’t answer only ask me to write in to request for and answer. This is CPF and government in Singapore now.”
Mr Chua’s post is trending on social media with nearly 1,000 shares. Those responding to his post were appalled that he was automatically placed on CPF Life and that he has no choice in how to manage his retirement funds.