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Wednesday, 21 February 2024 21:29

Closure of Special Account in line with CPF's purpose and intent: Lawrence Wong

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Deputy Prime Minister and Finance Minister Lawrence Wong speaking with panellists on CNA's Ask the Finance Minister programme on Feb 21, 2024. (Photo: CNA/Jeremy Long) - 

 

 

Voinews, Singapore - Measures announced at Budget 2024 affecting Central Provident Fund (CPF) members are “very much in line with the purpose and intent of the CPF”, said Finance Minister Lawrence Wong on Wednesday night (Feb 21).

Mr Wong, who is also Deputy Prime Minister, was addressing the move to close the CPF Special Account and the reactions it drew online.

Those aged 55 and above will no longer have a Special Account from 2025 onwards, but they will be able to put more money into their Retirement Accounts.

The Ordinary Account holds funds that can be withdrawn for housing and earns short-term interest rates, while the Special Account is for long-term purposes and so has a higher interest rate. 

“That’s the principle,” explained Mr Wong on CNA’s Ask the Finance Minister show, a post-Budget panel discussion that saw him field questions from four panellists.

“Of course, at age 55, you also have a Retirement Account. So instead of now having Special Account and Retirement Account, we are streamlining it into just one, which is the Retirement Account, which is for the long-term, for your retirement needs.”

Under the move, CPF members who have excess funds in their Special Account can transfer it to the Retirement Account – “all the way up to the revised Enhanced Retirement Sum and still earn the same interest rate as the Special Account”, said Mr Wong.  

 

“The vast majority of Singaporeans will be able to do so. And if they do so, they will get more in their Retirement Account. And eventually when they retire, they will get higher CPF payouts for life.” 

 

The Enhanced Retirement Sum is the maximum amount that CPF members can put into their Retirement Accounts to receive payouts. It is currently set at three times the Basic Retirement Sum (BRS), but will be increased to four times the BRS next year.

 

Those who have remaining Special Account savings after hitting the Enhanced Retirement Sum cap will have these savings transferred to their Ordinary Account. 

Mr Wong on Wednesday also touched on how employers should help their mid-career employees, particularly those aged 40 and above, reboot their skills. 

Even though employers who embrace this new mindset may experience higher-costs in the short-term as they have to invest in their workers’ training, Mr Wong believes they will emerge “much better” as a company//CNA-VOI

 

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