Parliament has just passed changes to the CPF Act to auto-include those with $60,000 in their Retirement Accounts at the age of 65 into the CPF Life scheme.
Previously, only those with at least $40,000 in their Retirement Accounts when they turned 55 from 2013 would have been auto-included in CPF Life.
Now, those with at least $60,000 in their RA when they are 65 from 2023 onwards will also be compulsory opted into the CPF Life scheme.
This change will affect mostly those whose CPF balances have some additional form of net inflow (on top of CPF interest) from the age of 55 to 65. These could be from property refunds, top-ups, interest income and employment wages if the members continue working.
According to Manpower Minister Gan Kim Yong, the change will increase the participation rate of the scheme’s first auto-included cohort from 70% to 80%.
Mr Gan also announced other changes of how CPF savings of deceased members would be disbursed to their beneficiaries.
From January 2011, CPF members can choose to have their savings transferred directly to the CPF accounts of their nominees, instead of having the payouts made in cash upon their death.
Also, the CPF Board will automatically disburse the money to the nominees instead of having to wait for nominees to apply for the bequeathed funds.
Changes will also be made to the way the CPF Board manages unclaimed monies of deceased CPF members.
CPF savings left unclaimed for six months upon the member’s death will be moved into the Ordinary Account, which pays a lower interest than that for the Special, Medisave and Retirement Accounts.
These CPF savings, if left unclaimed for seven years following the death of a member, will be taken over by CPF.
Over the last few years, the beneficiaries of about 280 people who died annually who have not come forward to claim the money amounted to about $2.4 million each year.
I suppose the last two changes pertaining to the unclaimed monies of CPF will apply more for those people who do not make CPF nomination as those with nomination will have their money disbursed automatically to their nominees.
If you do not have an existing CPF nomination, it is wise to make one today. Note that CPF nomination becomes invalid upon marriage so you will need to make another nomination if you get married.