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The first two sets of amendments in the Bill — the closure of the Special Account and the expansion of the Home Protection Scheme — are part of CPF's efforts to evolve its system to meet Singaporeans' needs.
Singapore passed the CPF (Amendment) Bill 2024 in Parliament on Monday (14 October 2024), which will give effect to the closure of the Special Account (SA) for members aged 55 and above in 2025. Another key scheme under the Bill is the expansion of the Home Protection Scheme (HPS) to offer cover to more CPF members with certain pre-existing conditions that are "not so severe".
At the same time, the Bill also introduces amendments to clarify processes and streamline the administration of the CPF Board and CPF schemes.
The first two sets of amendments in the Bill — the closure of the SA and the expansion of the HPS — are part of CPF's efforts the evolve its system to continue serving the needs of Singaporeans.
Closure of Special Account for members aged 55 and above
As previously discussed during the 2024 Committee of Supply debate for the Ministry of Manpower earlier, the principle behind closing the SA for members aged 55 and above is to right-site CPF monies.
Minister for Manpower Dr. Tan See Leng affirmed in his second reading of the Bill: "Only CPF savings committed towards long-term retirement needs should earn the higher long-term interest rate."
Today, members aged 55 and above have four CPF accounts:
- Ordinary Account (OA)
- MediSave Account (MA)
- Special Account (SA)
- Retirement Account (RA)
With the Bill, the SA of those aged 55 and above will be closed from the second half of January 2025 onwards, and members will only have three CPF accounts. CPF members will be notified when their SA is closed, through a hard copy notification, as well as an email or SMS where applicable.
Following the current practice for members turning 55 today, members' SA savings will be transferred to the RA, up to the Full Retirement Sum applicable to their cohort. The savings in the Retirement Account (RA) will continue to earn the higher long-term interest rate (currently 4.14%. ).
With the closure of the SA, any remaining SA savings will be transferred to the Ordinary Account (OA) and can be withdrawn. Members who wish to commit their withdrawable savings to their long-term retirement needs have the option to transfer their OA savings to their RA up to the Enhanced Retirement Sum (ERS).
As MOM clarified, the SA closure will not prevent members from earning the higher long-term interest rate.
"They can do so by voluntarily transferring their savings to the RA, up to the prevailing ERS. But 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."
Expansion of Home Protection Scheme
The Home Protection Scheme is an insurance scheme that protects CPF members and their loved ones from losing their HDB flats in the event of the member’s death, terminal illness or total permanent disability. Upon being assessed to be generally in good health, members are covered at a standard premium rate, even with pre-existing health conditions.
As MOM shared, the vast majority of applications are approved. That being said, there are still around 1.3% or about 1,400 HPS applicants that are rejected annually due to pre-existing health conditions based on factors such as overall severity, prognosis, control of the health condition, and the member’s health risk profile.
"While we cannot cover all pre-existing health conditions, we will expand (the) HPS from mid-2025 to cover those with certain pre-existing conditions that are not so severe, such as certain types of stroke and heart disorder."
However, these members will pay higher premiums that are commensurate with their higher likelihood of claims. Members who are eligible for coverage today will not face any premium loading or change to the standard premium rate.
MOM also clarified that the 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. This is to ensure that the HPS "remains sustainable and affordable for the majority of members".
The expansion of the HPS will be begin from mid-2025. For those offered coverage with premium loading, participation will be on an opt-in basis.
Clarifying processes and streamlining the administration
As part of the Bill, there are also four amendments that aim to streamline the administration of the CPF Board and CPF schemes.
First, the simplification of the CPF Board structure to comprise a Chairperson, six tripartite representatives, and eight other persons, which will give the Minister the discretion to appoint a Deputy Chairperson from among the Board members.
Second, the amendments emphasise the prioritisation of recovering the subsidy recovery amount of additional HDB subsidies ahead of CPF housing refunds, upon disposal of flats priced with additional subsidies.
Third, the clarification of the requirement for CPF housing refunds upon disposal of property that had undergone a Retained Ownership Transaction or had new co-owners added. The Act will be amended to clarify that the CPF Board requires CPF refunds only upon property disposal, and not at the point of transactions which involve the issuance of a new lease or title without any changes to the ownership of the property.
Lastly, repealing provisions that allow CPF Board to share prospective employees’ employment history with employers upon request.
In concluding his speech, Minister Tan expressed: "All in all, this ensures that the CPF system continues to serve the needs of Singaporeans over the course of their lives and remains effective as a key pillar of Singapore’s social security system."
Lead image / Minister of Manpower Dr. Tan See Leng's Facebook
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