MORE people are leaving their Central Provident Fund (CPF) savings untouched instead of making a withdrawal on turning 55.
Last year, there were 28,481 of them, comprising 56 per cent of the 50,435 eligible to take out their money.
The group who left their savings alone made up 46 per cent of 55-year-olds in 2007 and 50 per cent in 2006, according to the CPF Board.
The trend is likely to continue this year. In the first five months, 56 per cent of those who could have withdrawn their savings did not do so.
Each year, about 50,000 people turn 55 and can withdraw their CPF savings.
Those who prefer to leave their money with the CPF Board cite the higher interest they can earn, and the poor investment climate.
Since Jan 1 last year, CPF savings have earned an extra 1 per cent interest on the first $60,000 saved in all accounts - with up to $20,000 of this sum coming from the Ordinary Account.
All in, CPF savings can earn interest of up to 5 per cent a year, and are guaranteed by law to earn a minimum interest of 2.5 per cent.
This is more than the 0.125 per cent interest banks pay on savings, noted CPF deputy chief executive officer (services group) Soh Chin Heng.
Mr Goh Soon Lee, who turned 55 on April 19, agrees. He is among those who believe it is wiser to let their nest egg grow in the CPF.
Said the senior operations assistant: 'Unless you are a good investor, it's better not to use your hard-earned money to go and play around.'
Mr Soh said those who withdraw their CPF savings tend to be the less well-off or people with immediate financial commitments like paying for their children's education.
They do not have to meet the CPF Minimum Sum first in order to withdraw their savings: Those turning 55 from next month can withdraw all their savings if they have $5,000 or less in their CPF accounts, excluding Medisave.
Those with more than $5,000, but less than $12,500, can withdraw $5,000.
If they have more than $12,500 but less than $195,000, they can take out 40 per cent of the total balance in their Special and Ordinary Accounts.
Most fall into this category. On average, those aged 55 have CPF savings of between $56,000 and $71,000, according to 2007 data.
Those with more than $195,000 can withdraw all their savings after setting aside the Minimum Sum of $117,000 from next month and the Medisave Required Amount of $18,000 for this year.
Mr Soh is concerned that there may be a minority who do not need to take out their money, yet believe mistakenly that the Government will confiscate what they do not withdraw.
They can withdraw their savings anytime.
From the age of 65, they can also ask the CPF Board to make monthly payouts of a stipulated amount from their savings.
To clear misperceptions and answer their questions, the CPF Board organises monthly talks at the DBS Auditorium for those who turn 55.
It has also published a booklet answering common questions, such as the amount they can withdraw and the withdrawal process.
