Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Friday, 24 March 2017

Yes! There is interest on your CPF Housing Grant, BUT...

13:03 Posted by cheez No comments
No, this is not another pro-government blog post. Neither is this another anti-government post. This is purely a post to make sense of the article posted by The Online Citizen.
The Online Citizen recently published a post called 6 things you weren't told about the CPF housing grant.
We thought that the content was really new and surprising and that spurred us to do our own research if it was true - especially in current times where fake news is rampant!
The Investollo team had done a great job dissecting the CPF Housing Grant, and you can read more about what they have written:  CPF Housing Grant Increases.
We recommend reading their article first before reading ours - just in case you are lost.

Recommended Post: Singapore Retirement, Re-Employment, CPF Withdrawal Age

We did some digging, consulted experts and people with knowledge of the whole process.
We present our findings below.

1) Yes! There is an accrued interest attached to the CPF Housing Grant that you will have to return TO YOUR CPF ACCOUNT if you sold your house. (In case you missed that point, re-read the part we put in caps).
There is an accrued interest attached to the CPF Housing Grant, but at the end of the day when you sell your house, your CPF Housing Grant Money and the Accrued Interest goes Back Into Your CPF Account(s).

2) It is really difficult to find any information regarding the CPF Housing Grant and its 'terms and conditions'. To be exact, there is no such page on the internet.

3) If you die, your dependents do not need to repay the CPF accrued interest you have accrued. However, if the surviving spouse used his/her CPF savings to pay for part of the house, the accrued interest accumulated on the amount that he/she withdrawn will still need to be returned to CPF upon selling the house.

4) You cannot withdraw the grant out as part of your withdrawal. They will remain in your CPF as part of the non-withdrawable amount. This applies to accrued interest earned in your Retirement Account and other money you top up into your CPF.
For more information on this part, read up on our previous post: Fine Prints of CPF Money Withdrawal.

5) Point 3 in the article from The Online Citizen, it is stated that the Housing Grant levies a 2.6% accrued interest on the Grant money. It is actually 2.5% - the prevailing CPF Ordinary Account interest rate.

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Conclusion:

The CPF Housing Grant is still free money from the Singapore Government to you. The accrued interest accumulated in your CPF Housing Grant still goes back into your CPF Accounts. While it may reduce the amount of cash you can get from selling your house, at least the money is still with you - just in an account that you cannot touch until you are 55 years old. Although the way that it is structured is not very ideal, it does not change the fact that it is FREE MONEY from the Singapore Government that we can use in the future.

Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

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