When young Singaporeans think about the CPF, they are often reminded of an untouchable pot of gold reserved for their twilight years.
This is far from the truth.
The CPF was introduced to safeguard the interest of her citizens upon their retirement. Subsequently, the early housing development committee enabled citizens to purchase homes with their CPF, making housing an affordable affair on an island mired by limited land space.
Through the decades, the CPF continues to provide ever-changing benefits and opportunities for the lives of Singaporeans.
However, probably less widely known is the fact that the CPF may be used for a variety of other purposes way before we hit the milestone retirement withdrawal ages of 55 and 65.
This article explores some interesting facts of the CPF while shedding light on some perks that you can benefit from starting as early as today.
PSEA (Post-Secondary Education Account): More than Studies
This is an initiative by the MOE that allows parents to pay for their children’s post-secondary tertiary education upon the maturation of their CDA (Child Development Account), which are opened for citizens at birth and managed by their parents until the account holder reaches the age of 17.
This is an account that carries more significance to a parent’s contribution but there are some key CPF takeaways for young adults who have benefitted from the scheme. How so?
The PSEA account officially closes once the account holder turns 31 years old, and the remaining funds can be transferred to the PSEA of a younger sibling or are automatically transferred into the CPF Ordinary Account (OA) of the account holder.
Additionally, the PSEA may be used to pay for a large variety of adult learning courses available from NTUC Learning Hub, equipping workers with useful skills and qualifications in the workforce.
Some useful courses available include public speaking, counselling and teaching.
However, the conversion from PSEA to the OA is an irreversible process, so spend your funds timely!
MediSave Coverage
Healthcare remains one of the primary focus of the CPF and the concerns of an aging population.
The CPF heavily subsidises the medical treatments and facilities for Singaporeans through its Medisave scheme.
A fraction of your CPF contribution goes into your MediSave. Although the MediSave was set up to manage elderly healthcare, you can start benefitting from the scheme way before you turn grizzled.
MediSave funds are applicable for use at a list of public and semi-government medical facilities around the island for yourself and your family, where you can receive huge subsidies.
Parents-to-be can use their MediSave to pay a substantial portion of maternity hospitalisation and doctor consultation bills.
Your MediSave also goes on to benefit the next generation, with coverage of vaccinations and screening tests for new-born children.
Considering how MediSave covers the daily charge of a 5-bedded B2 ward for public hospitals, the fund is a wonderful solution for patients to seek treatment without worrying about the hospital admission bill.
Adults are also allowed to use their MediSave for a variety of vaccinations, which results in quality national healthcare standards for Singaporeans. Vaccinations for chickenpox and the hepatitis B are some of the available jabs covered by MediSave.
Based on personal experience and the feedback of friends and relatives, MediSave is truly the most practical aspect of CPF for non-retired adults.
Putting A Roof Over Your Head
Property prices are constantly fluctuating on our tiny tropical nation with the rise of en blocs and privatisations, but with consistent CPF contribution, homes are made affordable.
While one main purpose of the CPF is to ensure that citizens can own and service their properties throughout their old age, it is important for you to be up to date with the latest regulations to better prepare yourself for the volatile property market.
You may be aware of the recent updates to local housing laws, which has been tied down to the age of the applicants.
The new policy allows more young homeowners to afford new flats through improved HDB loan arrangements and CPF usage, but this poses problems for purchases made in the resale property market.
Through the recent collaboration between the Ministry of Manpower and Ministry of National Development, older applicants can tap on more of their CPF for the purchase of resale property while younger folks are granted a smaller leeway.
The general idea is that young citizens should be able to settle down at a place that lasts them until the age of 95. This was a recent move based on the increasing average life expectancy of Singaporeans according to the findings of the national census.
Since HDB flats have a lease term of 99 years, the government is circumventing a future flooded with homeless elderlies resulted from the miscalculations of youth.
Good news for young homeowners looking for brand new houses while on a tight budget but a bit of a mood dampener for those opting for older and more spacious property. After all, it is impossible to please everyone!
Misunderstood System?
The CPF is versatile – did you know you can invest your CPF too? Housing, healthcare and retirement are matters that require prudence and the CPF can go a long way in assisting you through tough times if properly understood and applied.
There will always be a comparison of global social policies; it is human nature to compete and maybe even to complain.
Instead of tirelessly faulting our system, it is perhaps in our best interest to learn more about how we can optimise the plans available to us through our CPF – the often-overlooked privilege of being a Singaporean.
