Make a nomination if you want to decide who gets how much of your savings. Senior Correspondent Lorna Tan explains how it can be done
Whenever the Central Provident Fund (CPF) system is tweaked, every aspect of the changes is scrutinised in great detail by members.
That is hardly surprising, of course, given that the CPF is an integral part of the retirement plans of people here.
Recently, some confusion arose over the important issue of how CPF savings are distributed when a member dies.
The muddle arose from an e-mail which did the rounds, that erroneously stated that when a CPF member makes a nomination in relation to the beneficiary of his funds, that nomination does not include the savings in his Medisave Account.
The e-mail, which made its way to various firms and the media, stated: 'The CPF nomination that we have done is only for the Ordinary Account. We have to make a separate nomination for the Medisave funds, otherwise the funds are automatically given to charities.'
When contacted, the CPF Board said the e-mail got it wrong.
'Where a valid nomination has been made, upon a member's death, all his CPF savings in his Ordinary, Special and Medisave accounts will be distributed to his nominees according to the proportion stated in his nomination form,' said the board.
It added that it has contacted the originator of the e-mail who has since clarified with her e-mail recipients that the information was inaccurate.
Here's what you need to know about making a CPF nomination and what it covers.
Q: What is the scope of the CPF?
Set up in 1955, the CPF is a comprehensive social security savings plan that aims, among other goals, to enable Singaporeans to have a secure retirement.
Over the years, the overall scope of the CPF has grown to include wealth accumulation through the CPF Investment Scheme (CPFIS), home ownership and health care.
Working Singaporeans and their employers make monthly contributions to the CPF which go into three accounts. They are:
The Ordinary Account where the savings can be used to buy a home, pay for insurance, investment and education;
The Special Account where the savings are set aside for old age and investment in retirement-related financial products; and
The Medisave Account where the savings can be used for hospitalisation expenses and approved medical insurance.
When your reach 55, a Retirement Account is set up to meet your basic needs during your old age. Your savings in your Ordinary and Special Accounts, up to the prevailing Minimum Sum, will be set aside in this account.
Q: What happens to my CPF savings after I die?
If you have not made a nomination in relation to your CPF savings, they will be distributed to your family according to intestacy laws.
This means that if you leave a spouse with no children or parents, your spouse will get all your CPF savings. But if you have a spouse and children, your spouse will get half of your CPF savings leaving the balance to be split equally among your children.
If you are single and have not made a nomination, your money will be distributed according to intestacy laws. So if you are single with no children, your CPF savings will be shared equally between your surviving parents.
Your CPF monies will go to the Government only in the absence of a spouse, children, siblings, grandparents, an uncle or aunt.
Do note that if you are a Muslim, your CPF funds will be distributed differently, in accordance with the Inheritance Certificate which can be obtained from the Syariah Court.
Q: What is covered by the CPF nomination?
If you have a valid CPF nomination, the following will be distributed to your nominees, in the proportion stated in your CPF nomination, upon your death:
(a) Savings in the Ordinary, Special, Medisave and Retirement Accounts; and
(b) Discounted SingTel shares bought in 1993 when SingTel went public.
The following assets are not covered by CPF nomination:
(a) Cash and investments held in the CPF Investment Account under the CPFIS-Ordinary Account;
(b) Investments held under the CPFIS-Special Account;
(c) Dependants' Protection Scheme (DPS) claim proceeds; and
(d) Properties bought with CPF savings.
For items (a) and (b), you may wish to cover them under a will, otherwise they would be distributed according to intestacy laws.
Your DPS proceeds can also be covered under a will but if you are an NTUC Income DPS policyholder, you can opt to nominate under the Cooperative Societies Act.
In the case of properties, it depends on their holding status. If the property is held with the legal status of 'joint tenancy', the deceased's share of the property will pass to the remaining surviving owner(s). Otherwise, the share of the property will form part of the deceased's estate.
Q: What is the CPFIS?
The CPFIS comprises the CPFIS-Ordinary Account and CPFIS-Special Account. It gives CPF members more options for investing their CPF savings, while meeting the long-term objective of financial security in old age.
The first $60,000 of your combined CPF accounts earns an extra 1 per cent interest. To enable members to earn extra interest, you can invest your CPF savings only after setting aside $20,000 in your Ordinary Account and $30,000 in your Special Account.
From July, the Special Account amount to be set aside will be raised to $40,000. If you have already bought investments under CPFIS-Special Account but do not have $40,000 in your Special Account, you will not be required to sell them. However, when you liquidate these investments, you would not be able to re-invest in them unless you have at least $40,000 in your Special Account.
Instruments that can be invested in under CPFIS include fixed deposits, Singapore Government bonds and treasury bills, annuities, endowment and investment- linked insurance plans, unit trusts, and exchange traded funds.
Q: Are my CPF savings protected from creditors?
The balance in your CPF is protected from creditors. But any CPF savings used for investments will not be protected from your creditors upon your death.
So if you have creditors, you may want to consider liquidating any CPF investments before death so that the monies are transferred back as your CPF balance and protected from your creditors.
Q: What happens if my spouse and I only nominate each other and we die at the same time?
Under such circumstances, the older spouse is deemed to have died first. If you are the older spouse, your CPF savings will be paid to your spouse's estate.
If you are the younger spouse, you have no nominee since your spouse is considered to have died before you. Your CPF savings will be distributed according to intestacy laws.
Q: How do I make a CPF nomination?
You can print a copy of the nomination form from www.cpf.gov.sg or collect the form from any CPF centre. You should ensure that your witnesses are at least 21 years old. You and your nominees cannot act as witnesses.
Your nominee can be under 18 years of age but if he is below 18 at the time of claim, his share will be forwarded to the public trustee until he turns 18.
You may nominate someone who is not a family member. If your nominee is not residing here, write your nominee's identity card/passport number and address clearly on the nomination form.
You may also nominate organisations such as churches, mosques, temples and charitable organisations, provided they are registered as a legal entity.
Q: When do I make a CPF nomination?
You don't need to submit a CPF nomination if you have no qualms about your CPF savings being distributed to your family according to intestacy laws.
But if you wish to distribute your CPF savings differently, make a CPF nomination. You can then decide who your beneficiaries or nominees will be, as well as the proportion of CPF savings you would like them to receive upon your death.
Do take note that you should make a new CPF nomination when one of your nominees dies; if you wish to add a new child or relative to your nomination; when you marry or re-marry; and upon divorce.
Getting married renders any earlier CPF nomination invalid. This means that if you do not make a fresh nomination, your CPF savings will be distributed to your family under intestacy laws.
Unlike marriage, divorce does not revoke your previous nomination. This is because you may still wish to provide for your ex-spouse and children. But you may wish to re-nominate when a divorce takes place.
If you do not make a fresh nomination after one of your nominees dies, his share will be given to the remaining nominees in the same proportion as their specified shares.
Q: Does the court have the power to make or revoke CPF nominations on behalf of a member who lacks capacity?
Under the new Mental Capacity Act, the CPF nominations rules have been amended to allow the court to make or revoke CPF nominations on behalf of a member who lacks capacity.
As such, you may want to apply for a lasting power of attorney (LPA) which allows you to plan how your affairs will be managed when you are still alive, but without mental capacity.
The LPA has to be lodged with the Office of the Public Guardian, which is under the Ministry of Community Development, Youth and Sports.
Q: How do I check if I have made a CPF nomination?
Your nomination status is indicated in the Statement of Account that you receive from the CPF Board annually. You can also check your nomination details via its website under 'my cpf online services - my requests', or visit a CPF centre.
Q: How do I cancel a previous nomination?
You can do so by submitting a Notice of Revocation of Nomination. Bear in mind that once you do that, your CPF savings will be distributed according to intestacy laws unless you re-nominate someone else.
Who gets your money
If you have not made a nomination in relation to your CPF savings, they will be distributed to your beneficiaries according to intestacy laws.
This means that, if you leave a spouse with no children or parents, your spouse will get all your CPF savings.
But if you have a spouse and children, your spouse will get half of your CPF savings leaving the balance to be split equally among your children.
Source: Sunday Times, 23 May 2010