“During a parliamentary debate on March 4, 2024, Manpower Minister Tan See Leng addressed concerns regarding the planned closure of the Central Provident Fund (CPF) Special Account (SA) for members aged 55 and above. He emphasized that grandfathering the scheme for older members, as suggested by West Coast MP Foo Mee Har, would create a generational divide and disproportionately benefit current older Singaporeans while disadvantaging younger cohorts.

The closure, set to take effect in 2025, was first announced by Finance Minister Lawrence Wong in his Budget speech on February 16. Under this change, savings in the SA will be transferred to the Retirement Account (RA) up to the Full Retirement Sum, with any remaining funds moved to the Ordinary Account (OA). While savings in the SA and RA earn an interest rate of at least 4%, those in the OA earn only 2.5%. As a result, members who max out their RA savings will earn a lower interest rate on their excess funds.

Dr. Tan noted that only about 8,400 members, who are considered “”relatively high-income earners,”” would be unable to fully transfer their SA savings to the RA. This represents less than 1% of all members aged 55 and above, indicating that the vast majority (over 99%) can successfully transfer their funds to continue earning the higher interest rates.

While acknowledging that approximately 720,000 members with withdrawable SA balances may experience some liquidity loss, he stated that this loss would amount to a median of less than S$3 per month or S$30 per year. Members can choose to retain these balances in the OA, invest in safe instruments through the CPF Investment Scheme, or withdraw their funds to invest outside the CPF system.

Dr. Tan reiterated that the CPF system is designed to address the basic retirement, housing, and healthcare needs of Singaporeans and emphasized that even as the system evolves, its fundamental objectives remain unchanged.”