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What will happen to your CPF monies upon death?

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Recently, my colleague passed away unexpectedly, leaving behind two young daughters and wife. His wife is a full-time housewife. In grieving his death, I wondered whether my family would be able to cope if I suffered the same fate. Like my late colleague, both of us are sole breadwinners. So, I can imagine the family’s financial concerns and the fundamental questions on the destiny of CPF monies upon death.

Most often, there are misconceptions on the distribution of CPF monies upon death. There were even false rumours that Medisave savings go to the government after death as they are not included in CPF Nominations. In this article, I will attempt to explain the framework and try to gain a better understanding of the system. Again, I must put a disclaimer that this article is not meant to be a legal nor financial advice. In case of any doubts, please seek advice from licensed professionals.

Upon death, you would want your loved ones to have access to your CPF savings. This is especially so if the family’s financial situation is not so ideal. You don’t want your family to undergo financial hardship after you passed on. Ultimately, how you plan your estate will determine the outcome. For example, previously I wrote that CPF monies cannot be included in your Will as they do not form your estate.

In the following, I will explain the process of the distribution of your CPF monies. Basically, it really depends on the decisions you made before death. Most crucially, the situation is dictated by whether you have made a CPF nomination. Read carefully and think through carefully before making judgement.

CPF monies

With CPF nomination

If CPF nomination had been made, things are quite straight forward because the CPF monies will be distributed in accordance to the nomination by the CPF Board. Generally, the CPF monies will not go through the Public Trustee for administration and will not be distributed in accordance with the Intestate Succession Act. But things become very tricky if you happened to nominate your young children as nominees for your CPF monies. The following information can be found in Public Trustee Office.

You can nominate someone who is below 18 years old. However, if he is below the age of 18 at the time of claim, his share will be released to the Public Trustee for administration until he reaches 18 years of age. The fees payable for holding nominated CPF money in trust for a minor are shown below.

 Amount of CPF money Charge
For the first $1,000 2.400%
For the next $9,000 1.500%
For the next $240,000 0.750%
For the next $250,000 0.450%
For amounts over $500,000 0.300%

These are one-time fees, which will be taken from the nominated CPF money. They include GST and cannot be waived.

The money held in trust for the minor is invested by the Public Trustee according to law. The investment earns interest for the minor from year to year. Whenever interest is to be paid to the minor, a fee is charged on the amount of the interest. The net interest amount (less the fee) is paid into the minor’s trust fund. The fee charged on the interest amount is as shown below.

 Amount of Interest Earned Charge
For the first $1,000 5.50%
For the next $1,000 4.50%
For the next $1,000 3.50%
For amounts in excess of $3,000 2.25%

 

In my opinion, I would not want my CPF monies meant for my children to be withheld as trust by the government until they reached 18 years old. Furthermore, why should I pay the fees and interest for the investment returns? Therefore, to avoid having your CPF monies being trapped, consider your CPF nomination carefully. Some people may prefer to make 100% CPF nomination to their spouses. But take note that divorce does not revoke your CPF nomination. Henceforth, you should always review your CPF nomination so that it continues to meet your intentions.

Based on my family’s experience, I can confirm that CPF Board will release all CPF monies (including Medisave) on death grounds. When my late father passed away in 2013, we were surprised to be notified by CPF Board to claim Dad’s CPF monies within a month. The amount included his Medisave savings. To be frank, I was really impressed by CPF Board’s archiving record system because I vaguely remember filing up the form for Dad more than 15 years ago but I could not exactly remember the details of the nomination. Also, CPF Board had been very professional and disbursed Dad’s CPF monies to us within a couple of weeks.

For those who had made CPF nomination, rest assured that there is a service standard set by CPF Board. If the deceased member made a valid nomination, CPF Board will invite the nominees to apply to claim the deceased member’s CPF within 15 working days from the date the Board is notified of the member’s death. When the application is received, payment will be made as follows: Interbank GIRO (IBG) Non-IBG 15 working days 20 working days An additional 7 working days are required if the deceased member held Discounted SingTel Shares.

Gold

No CPF Nomination

Things become tricky if you did not make a CPF nomination. Your CPF monies will not be handled by the CPF Board. Instead, your CPF savings will be transferred to the Public Trustee’s Office (PTO) for distribution to your family members under the Intestate Succession Act or the Inheritance Certificate (for Muslims). The PTO charges your beneficiaries an administration fee for the distribution of your CPF savings.

Upon receiving notification of the death of the CPF member, the CPF Board typically requires 4 to 6 weeks to remit the un-nominated CPF money to PTO for administration.  You will only be able to submit an online application for the administration of the Deceased’s un-nominated CPF money after PTO has received the money from the CPF Board. Once PTO has received the money from the CPF Board, they will write to the person who had notified the CPF Board of the death of the CPF member, to make an online application for the administration of the Deceased’s un-nominated CPF money.

According to PTO’s website, the PTO receives about 600 to 700 number of new cases for administration every month. So, you can imagine the workload of PTO office. What this means is that the application for PTO to administer deceased un-nominated CPF monies could potentially take months or even years, depending on the quality of submission. If the required documents, such as marriage or birth certificates were not submitted promptly, the disbursement of CPF monies would be delayed until the authority is satisfied. And you certainly don’t want such scenario to happen to your loved ones.

In the absence of CPF nomination, the PTO would distribute the CPF monies in accordance with the Intestate Succession Act, which may be inflexible and not in accordance to your wishes. Furthermore, PTO also charges fees for handling CPF monies. The fees payable is extracted from PTO website:

 

Amount of CPF Monies Charge
For the first $1,000 2.400%
For the next $9,000 1.500%
For the next $240,000 0.750%
For the next $250,000 0.450%
For amounts in excess of $500,000 0.300%

 

These fees, which will be taken from the CPF money, include GST and cannot be waived. You will have to pay a minimum fee of $15.

Conclusion

Making CPF nomination is pretty easy and is free of charge. You may book an appointment with CPF Board and then go down to the service centre to make the CPF nomination. However, if you did not make CPF nomination at the point of your death, there are fees to be payable to PTO. In addition, it may take a long time for the distribution process to be completed. Under such circumstances, your loved ones may not have access to your CPF monies until PTO released it.

So, don’t procrastinate any more. Go ahead and make your nomination. And make sure that you review your CPF nomination from time to time because family circumstances often change in the form of marriage, divorce or new birth. In life, never say never.

Read my other articles on CPF:

  1. CPF nomination and making a Will
  2. Devastating HDB Loan and CPF Accrued Interest
  3. CPF’s Home Protection Scheme (HPS)
  4. The Dark Side of CPF Housing Withdrawal Limit

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4 Comments

Add a Comment
  1. Good post!!

    There’s just not enough emphasis by authorities for people to do CPF nomination, and there’s also no publicizing about the additional costs & delays involved without nomination.

    Maybe they just don’t want the problems of CPF nominations not being revoked by divorce, with the increasing proportion of divorces in S’pore now …. 1 in 3 marriages, and increasing… In this case, it’s better for the law to be changed for CPF nominations to be auto-revoked by divorce … just like for event of marriage currently.

    Btw, no need to go to CPF branch for nomination unless need further explanation. Can just print the form from CPF website, get a couple of relatives or friends to sign as witness, & mail back to CPF. Make copies of the signed form for your records before you mail it off.

  2. If the child is a toddler, we can arrange for the money to be transferred to his/her medisave or special account. It is better than the Public Trustee or giving all to the spouse to manage.

  3. Hi Sinkie,

    You are right about the part on printing out the form and mailing it back to CPF. That was what we did for my late Father’s CPF nomination.

    Regards,
    Gerald
    http://www.sgwealthbuilder.com

  4. Hi Caelitus,

    I am not sure if you are able to specifically nominate your CPF savings to be transferred to your toddler child’s Medisave or Special account. Have you done so?

    Regards,
    Gerald
    http://www.sgwealthbuilder.com

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