Last Updated on by Tree of Wealth
CPF savings for housing payment
Retirement is looked forward to by many Singaporeans.
However, worries are aplenty as well. Issues such as housing payments may contribute to post-retirement concerns, especially if people are unaware or unsure of the measures put in place by the Central Provident Fund (CPF) Board.
If you are worried about how to repay your housing payments after reaching 55 years old, fret not, you will still be able to repay your housing payments using the money in your Ordinary Account.
Here is what you will need to know with regards to reserving your Ordinary Account (OA) Savings to repay your housing loans in your golden years.
Using CPF to pay for your housing loan
After turning 55, savings from your Special Account (SA) and OA will be transferred to your Retirement Account (RA).
To pay off your housing loan, you can use your reserved savings in your OA. The reserved amount will only be available if you have applied to reserve it in your ordinary account before turning 55 years old.
If you are still working after the age of 55, you can use your new CPF contributions to your OA.
If you did not set aside a Full Retirement Sum, reserved Ordinary Account (OA) savings will be transferred to your RA once you start monthly payouts under CPF Life or the Retirement Sum Scheme.
The transfer will result in the growth of your RA savings and increase the sum of the monthly payouts.
Reserving your OA Savings to ensure that it can be used for housing payments
Individuals without an existing property but may purchase a property in the future can submit their request to the CPF Board here.
If you have already committed to a property purchase while filling out the request, you will have to attach a copy of your Option to Purchase or Sale and Purchase agreement in your request.
If you have not committed to a property purchase while filling out the request, but will be purchasing a property in the future, you will need to provide your Option to Purchase or Sale and Purchase agreement separately.
There is no maximum or minimum sum that can be reserved. You can request to reserve the full sum or some of your OA savings.
After monthly payouts under CPF Life or the Retirement Sum Scheme starts, and you have not set aside your Full Retirement Sum, your reserved OA savings will be transferred to your RA.
The transfer will result in the growth of your RA savings and increase the sum of your monthly payouts.
To add on, you will not be able to withdraw the OA savings that you have set aside for your housing payments in cash.
Reserving an amount in your OA for housing payments may also affect your monthly payouts under CPF Life or the Retirement Sum Scheme when it starts, as the OA savings reserved for your housing payments would not be transferred to your RA.
Reserving your OA savings before the age of 55
Both individuals who own an existing property, and individuals who have yet to purchase a property are eligible to reserve their OA savings before the age of 55. This savings can be used for housing payments after turning 55 years old.
If you would like to reserve your OA savings for housing payments after you turn 55 years old, you would have to submit a request to the CPF Board before the transferral to the Retirement Account.
The request should be received by the CPF Board at a minimum of 3 weeks before your 55th birthday.
It is important to take note that after monthly payouts under CPF Life or the Retirement Sum Scheme starts, and you have not set aside your Full Retirement Sum, your reserved OA savings will be transferred to your RA.
The transfer will result in the growth of your RA savings and increase the sum of your monthly payouts.
Conclusion
It is important for Singaporeans to learn and understand the pros and cons of using their OA savings for their housing payments after their retirement.
By doing so, they would be able to make the necessary preparations and decisions that are better suited to their needs.
