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CPF Medisave Minimum Sum to be scrapped on 1 January 2016

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Health Minister Gan Kim Yong announced in Parliament yesterday that the Medisave Minimum Sum will be scrapped next year January. For many Singaporeans who had been lamenting that their CPF monies “don’t really belong to them”, this is definitely a form of greater flexibility on the uses of their Medisave accounts. This is because when Singaporeans withdraw their CPF monies at age 55, they will no longer need to first top up their Medisave accounts to the MMS. Instead, they will only need to meet the withdrawal rules.

Another change would be the Medisave Maximum Ceiling, which would be fixed for each cohort of Singaporeans when they turn 65 years old. Mr Gan reiterated that the ceiling has to be raised every year to keep pace with rising inflation and increasing life expectancy. Given a choice, I would not touch my Medisave monies even if I am 55 years old now because the interest earned in Medisave account is so much higher than the current bank saving rates. However, going forward, the interest rate environment might change, so I really appreciate the scrapping of the Medisave Minimum Sum.

The revised Medisave rules is a sign that the government is beginning to soften its hardline approach on CPF monies. The previous approach involved a blanket rule that assume all Singaporeans can’t manage their personal finances and health-care costs in their retirement years. Henceforth, the need for minimum sum to prevent Singaporeans from using their Medisave before they reach retirement.

This development was in line with what PM Lee had announced a while ago – giving Singaporeans more flexibility in the use of CPF. Given our government’s conservative style, I think there would be more changes coming along for our CPF Ordinary and Special accounts. I am hoping for more good news!

Magically yours,

SG Wealth Builder

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1 Comment

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  1. The government main idea to use Medisave fund for investment if not they can pay 4% plus 1% Singapore bond. The CPF board they looking for those people had no Medisave or less Medisave and don’t had children or private insurren but they did not look on those people 65 of age above had eldersave, had private insure, had two children in case not enough the children can pay from their Medisave accountand now government had Medisave life with now had ceiling amount, more they should look at person history record if they did not use any Medisave for disease or illness. The goverment Should not increase the Medisave $3,000 each year in this case should increase $1,000

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