CPF: Complicating People’s Funds. Got Problem, No Solution. Yet.


Ryan Ong



Common interpretations of “CPF” range from “Curi (steal) People’s Funds” to “Coffin Provision Fund”. Singaporeans have been griping about it since the days children read actual books, and unlike NS, it’s not getting easier. Over the past couple of weeks, I spoke to friends and neighbours about their issues with CPF. Somewhere between their saliva flecked rants and obscene gestures, I picked out five complaints that stood out. But first off…


What is the CPF?

The Central Provident Fund (CPF) was set up to make sure we’re saving money. 20 percent of our pay goes into our CPF, and our employer contributes 16 percent. At a total of 36 percent, it’s one of the highest contribution rates in the world (for a government enforced savings plan). Although it’s not explicitly stated, CPF is to ensure we won’t end up on social welfare. The CPF is split into three accounts for everybody:

  • Ordinary Account – Money that can be used for home loans, investments, education, and insurance.
  • Special Account – Provides for retirement
  • Medisave – Used to subsidise medical costs

CPF savings earn a minimum interest of 2.5 percent. In addition, the first $60,000 (combined from all accounts) earn an extra 1 percent. Not bad, if you ignore the fact that you can’t withdraw it. Not till you’re 55. And even then, you can’t withdraw all of it.


Man locked out of house
Ever been locked out of your own house? Like that, except the locksmith only turns up when you’re 55.


At 55, you get all the CPF money except for the minimum sum (MS). That’s a sum that’s left behind, to provide for your retirement. This is the current MS:


55th Birthday on or after: Minimum Sum: Minimum Sum (adjusted for inflation):
1 July 2011 $112,000 $131,000
1 July 2012 $116,000 To be announced
1 July 2013 $120,000 To be announced

This minimum sum goes into an account called the CPF-RA (Retirement Account). After you hit 62 (current “draw-down” age), you can start to withdraw from the RA. Not as a lump sum, but as monthly hand-outs.

Assuming you start pushing up daises after 80 odd years, you’d have been provided for your entire life. What’s bad about that? Well for starters…


1. “I Will Never Live to See the Money”

Says Aaron Siew, who’s around 30. Aaron asks:

“How can they know whether I will still be alive at 6o something? Or that I will live to 80 plus? If I die before that, that means all the money in my CPF is money that I earned, but never get to spend. It’s as good as not having the damn money at all!”


The correct response to that was not “But if you’re dead you won’t care anyway?”


Aaron’s father, who declined to be named, agreed:

“It’s ridiculous to set this kind of condition, that I have to reach a certain age. It should be a particular amount, like I accumulate $100,00 or $150,000, and after that I can withdraw. Whether I am 50 or 60 at the time shouldn’t matter. I have enough money for my retirement anyway. And to be frank, I think I will not see 70.”

Uh, okay, let’s skip the morbidity and move on…


2. “I Can Make More Investing the Money Myself”

Says Aaron’s father. The man’s invested in various businesses, with a lot of success. He thinks he can make better use of his CPF money than the government:

“I know that 2.5 percent (the CPF interest rate) is higher than the bank. But honestly, I have investments right now that are doing twice as well. And I have been making from investments since 1983. Most of the time, my returns have been much higher than what I would get from my CPF.


Singapore Rich
Not on the list: CPF Investors


The money that is in my CPF right now, I could invest in property, in stocks, in start-ups. But I can’t touch the money at all. The way I see it, I am not making as much as I could. To me it’s the same as losing money.”

Then there are the job hunters, who say:


3. “The CPF Makes Me More Expensive to Hire”

She doesn’t want to be named, so let’s call her Jodie. She’s been job hunting for the past two months, and she tells me the CPF is making her lose out to foreign workers.

“As a Singaporean, my employer has to pay 16 percent CPF. If I were a foreign worker, it wouldn’t be necessary. What’s the point of having a foreign worker levy if, in the end, there’s also a ‘levy’ to hire me? To me the CPF contribution is like a ‘Singaporean worker levy’.

I can’t really blame them if they don’t hire me. In my line of work (F&B wait staff) most bosses would rather just employ China workers. Even with the levy it’s cheaper to hire them.”


Singapore coffee shop
Coffeshops: Uniquely Singaporean. Oh, except the staff. And a third of the customers. And the food supplies. And the…nevermind.


It’s not just the unemployed like Jodie who have issues though. This next person is fairly well off…


4. “I’m Paying for a Scheme I Don’t Need”

Somchai is a guy I’ve known for over a decade, and his swearing can strip paint off a factory wall. He said something that approximated to this, minus the vulgarities:

“It’s not that I want to boast ah; but I have enough for my retirement. Even if (touch wood) the worst thing happens, I got this bungalow, I got the flat in Chai Chee. I sell this one, I go and live in the HDB, I don’t have any problems. And I have two fixed deposits also, will have quite a lot when I am 50 or 60.


Weasel Head
Since Somchai won’t let me use his pic, even though I’ve known him for 12 years, I’ll use the next closest thing.


So try and see it from my point of view. CPF is to provide for emergencies and retirement. I already have enough for emergencies and retirement. So end up my CPF money…I pay for what? I’m just paying money for something that I don’t need.”

Somchai fumed, but he wasn’t as angry as the next woman I spoke to:


“How Do I Know What They’re Up To?”

She doesn’t want to be named, so I’ll call her Chan. She’s unhappy about the way CPF is invested, and thinks we need more transparency.

“Please write that I am not making any statements or anything. I am just speculating. But I am not happy. I think there should be more transparency with regard to the CPF. The government’s response to Low Thia Kiang just made me even more confused.


Opposition Rally
Pictured: Opposition rally. Or, number of people also confused by the response.


If our government is investing our money, doesn’t that mean it’s not risk-free? If they lose the money somehow, they can just push back the age requirement. So if they make a big profit from investing it, they pocket the money and throw small change at us. If they lose the money, they can just say ‘oh, you have to wait another 10 years to get it’.

I’m not saying that this is what they’re doing, I’m just saying this is what they can do. And if they did we also wouldn’t know.”


A Conclusion…Sort Of

I’m sure there’s a lot more griping out there, but (1) there’s only so many people I had time to talk to, and (2) these are the reasons that kept coming up. Ultimately, I’d have to conclude that the root of the problem isn’t just financial. I feel it’s not just about money, but about Singaporeans getting tired of government hand-holding.

Image Credits:

The Online Citizen
A Green Life: Life’s Little Lessons by Janet Cropper
Home Alarm Monitoring
The Inn-Crowd
The Workers’ Party

Got a complaint about the CPF? Comment and let us know!

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.