Ho Ching shares article against early CPF withdrawal

Singapore –The Central Provident Fund (CPF) and why some people who wish to empty their accounts early when such a decision could backfire in the future was the focus of a recent topic shared by Ho Ching.

“Why do some people want to empty their CPF accounts early when it will hurt them later?” was the title of a Singapore Matters article reposted by the CEO of Temasek Holdings and wife of Prime Minister Lee Hsien Loong, Mdm Ho. The report broke down the effect of choosing to withdraw or leave one’s money in the CPF account while highlighting why this support scheme is rated so highly in the world.

“Some people love it so much, they actually top up their retirement account up to an enhanced retirement sum so that they may enjoy a big and comfortable monthly payout for life,” the article noted. Singapore’s CPF has been rated as the best retirement scheme in Asia for its adequacy, sustainability and integrity by an independent panel of experts at the Melbourne Mercer Global Pension Index.

Instead of withdrawing at the age of 55, calculations show that leaving the amount to grow will yield higher monthly payouts such as receiving S$850 a month from CPF Life at the age of 65 for life, not just up to 85 years old. If one had a total of S$192,000 in their savings at the age of 55, the monthly payouts would increase to S$1,600.

According to Straits Times’ Invest Editor Tan Ooi Boon, there are two probable reasons why people still insist on withdrawing their CPF upon reaching the age of 55. People have a poor understanding of how the scheme works and listen to those ignorant of the process without bothering to conduct due diligence, said Mr Tan. He explained that 50 per cent of those who emptied their CPF only deposited the sum in their banks where interest rates don’t come close to CPF rates.

There were illogical fears that leaving the money in the CPF would mean not seeing it in the future as “the Government will allegedly come up with more reasons to deprive them of their money,” was another reason provided.

Members of the public replied to the post; many in agreement that the CPF would serve them well in the future. The scheme gives the best yield and protection for old age, many commented. Facebook user Chelsey Chen noted that 55 was a very young age in today’s society. “Those who have to depend only on their CPF after that age all the more should not draw it out” due to poor financial planning.

Meanwhile, a few commented that life was “short and unpredictable” and that withdrawing one’s CPF could be used to enjoy the fruits of their labour or fulfil their dreams and passions at an earlier age.

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