Applications for Early CPF Withdrawal

17 Assoc Prof Daniel Goh Pei Siong asked the Minister for Manpower (a) what is the definition of "severely impacted life expectancy" to apply for an early withdrawal under the CPF Medical Grounds Scheme; (b) whether the definition can be brought in line with the Life Insurance Association's Critical Illness Framework or the equivalent for transparency reasons; and (c) what is the reduced Retirement Sum for calculating the withdrawal amount and how is it derived.

The Minister for Manpower (Mr Lim Swee Say): Mdm Speaker, Central Provident Fund (CPF) members with serious medical conditions can apply for an early withdrawal of CPF savings under the CPF Medical Grounds Scheme. The four criteria are: having a terminal illness, permanent incapacitation, suffering from an unsound mind, and having a severely impaired life expectancy.

It is not appropriate to adopt the Critical Illness Framework of the Life Insurance Association as the definition for severely impaired life expectancy, as suggested by the Member. This is because not all their listed medical conditions would result in a severely shortened life expectancy, for example, loss of hearing or loss of speech. Conversely, there may be medical conditions which are not on their list but could still result in a severely shortened life expectancy. We, therefore, require members who wish to make withdrawals on any of these four grounds to have their medical conditions certified by doctors either from public medical institutions or on the CPF Board's panel. In the last two years, the CPF Board approved about 1,000 applications each year.

CPF members who are terminally ill will be able to withdraw all their retirement savings in one lump sum. Members who are permanently incapacitated, suffer from an unsound mind or have a severely impaired life expectancy will be able to make a lump-sum withdrawal from their retirement savings after setting aside a reduced Retirement Sum. Currently, it is $40,300, which is about half the current Basic Retirement Sum.

Mdm Speaker: Assoc Prof Daniel Goh.

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): I thank the Minister. Is there an existing list of ailments that lead to severely limited life expectancy available for the public to consult so that they know how to apply for the scheme?

My second question is: is this application process accessible to people from all walks of life, especially the elderly who cannot understand English well, and what may be done to make this scheme more accessible to them?

The third question is regarding the $5,000 cap for the fourth criterion. How long ago was this cap of $5,000 established and whether there were considerations to increase the cap, given the higher cost of living these days?

Mr Lim Swee Say: Mdm Speaker, firstly, whether there is a list, the answer is no, because it is not possible to have a complete list. Any member who wishes to apply for the scheme, all they need to do is to go and see a doctor on our panel. We have a standard form for the doctor to do the certification. CPF Board will basically abide by the assessment of the medical expert.

The second question was about accessibility. Every year, we have 1,500 applications. So far, we have not heard of any feedback on lack of accessibility. When members need to use their money in the CPF prematurely, they will come to the CPF Board. They do not wait for us to reach out to them. Firstly, we do not know who they are; secondly, once they need the money, based on our experience, they will come. Therefore, we do not think accessibility is an issue.

The last point is about the $5,000 cap. If I understand the Member's point correctly, he is asking whether we should raise the $5,000 cap. I would hesitate to do so because how the cap works is this. A member, having set aside the reduced Retirement Sum and if the balance is less than $5,000, then they do not qualify under the scheme because the amount is too small. So, in other words, if we were to raise the sum, more and more of them will be deprived of this concession. Therefore, for now, I will just keep it at the $5,000 mark.

Mdm Speaker: Assoc Prof Daniel Goh.

Assoc Prof Daniel Goh Pei Siong: Just to clarify. For successful applicants for withdrawal of CPF on medical grounds, they can either withdraw the higher of up to $5,000 or the savings after setting aside. So, the cap is actually the higher amount that they can withdraw. Therefore, it is not that they will be unsuccessful if they have less than $5,000 in their CPF.

Mr Lim Swee Say: Mdm Speaker, I thank the Member for the clarification. On balance, it is about allowing them to withdraw more in lump sum versus keeping some of them for their monthly withdrawal. Our assessment is that for members who are able to meet the reduced Retirement Sum, which currently is set at $40,300, just to put it into perspective, they would be able to withdraw a monthly sum of only $550 which is derived from the Department of Statistics Household Expenditure data for lower-income households. The amount of $550 will be just sufficient to meet their basic requirements.

Another piece of information is that at $550, the amount of $40,300 can last about seven years. It is not all that long. In other words, on the part of CPF, we really have to strike a balance between allowing the member to draw more as a lump sum versus having some of these savings to support their monthly expenditure. On balance, we think $5,000 at this moment, is about the right amount.