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To clarify, MOM shared that the closure of the Special Account aligns with the principle that only long-term savings should earn higher long-term interest rate.
Ministry of Manpower (MOM) of Singapore has responded to a parliamentary query on the common misconceptions that still prevail about the closure of the CPF Special Account (SA) for members aged 55 years and over from early 2025.
MOM shared three common misconceptions:
- whether this move is meant to save on interest payments,
- whether interest accrues to CPF LIFE members who choose to transfer their monies from the SA to the Retirement Account (RA) after the closure of the SA, and
- whether the Government is trying to lock up member’s savings.
While MOM and the CPF Board have previously tackled these misunderstandings, the response added: "Nonetheless, the following key clarifications from our earlier explanations are worth reiterating."
The key clarifications are listed below:
- The closure of the SA aligns with the principle that only long-term savings should get a higher interest rate. More than 99% of CPF members aged 55 and above now have the option to fully transfer their SA savings to their RA when the Enhanced Retirement Sum increases to four time the Basic Retirement Sum in 2025, to continue earning the higher interest rate and getting bigger retirement payouts.
- Interest continues to build up on the CPF LIFE premium and is included in members’ CPF LIFE monthly payouts for life. When a member passes away, any unused premium, together with any remaining CPF savings, is refunded to the member’s beneficiaries.
- SA savings which are withdrawable will move to the Ordinary Account (OA) and stay withdrawable. Savings transferred to the Retirement Account (RA) will boost monthly retirement payouts, available from age 65. If remained unclaimed by age 70, payouts will be made automatic, aligning with CPF's aim to ensure lifelong retirement income.
The Ministry stated that trade associations, chambers of commerce, and tripartite stakeholders can play vital roles in supporting workers to plan for retirement and can guide their members to online resources to address misconceptions effectively.
"They can also work with employers to leverage available schemes to support senior workers who have less retirement savings.
"For example, companies can choose to leverage on the Matched Retirement Savings Scheme, where the Government provides a dollar-for-dollar matching grant for cash top-ups (including those from employers) made to the RA of eligible members," MOM said.
READ MORE: FAQs: What to do when your CPF Special Account closes after you've turned 55, effective 2025
Lead image / 123RF
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