WHY IT MATTERS
For those aged 55 and above, the savings in the SA will be transferred to the RA, up to the Full Retirement Sum, so that members can still receive higher interest rates of over 4 per cent.
However, any remaining SA savings will be transferred to the OA, which earns the short-term 2.5 per cent interest rate and can be withdrawn when needed.
This means that this remaining sum in the OA will not be under the 4 per cent interest rate of the SA.
Minister for Manpower Tan See Leng said that the move is to “right-site” CPF money.
“Only CPF savings committed towards long-term retirement needs should earn the higher long-term interest rate,” he said.
Moreover, from 2025, the members can opt to transfer their OA savings to their RA up to an Enhanced Retirement Sum (ERS), which has been raised to four times the Basic Retirement Sum from Jan 1 next year.
Dr Tan said that currently, more than 99 per cent of CPF members aged 55 and above would be able to transfer all their SA savings to their RA, if they wish to do so.
“In gist, the SA closure will not prevent members from earning the higher long-term interest rate,” said Dr Tan.
“They can do so by voluntarily transferring their savings to the RA, up to the prevailing ERS.”
However, if members want to retain the flexibility to withdraw these savings at any time, then the savings can remain in the OA and earn the OA interest rate, he added.
As for the changes to the HPS, it is expected to benefit about 100 members a year with pre-existing conditions that are not so severe.
However, such members will pay higher premiums that are commensurate with their higher likelihood of claims, which is aligned with industry practice, said Dr Tan.
To ensure that the HPS remains sustainable and affordable, a small minority of members with more severe health conditions, such as those currently receiving treatment for cancer, would not be able to participate in the HPS, in line with industry practice.
