Why can't I withdraw my CPF in a lump sum to pay off my debt, and instead have to incur interest on my debt?
As members' CPF monies are needed to provide for their basic retirement needs, these monies are protected under the CPF Act from claims by creditors. This protection is intended to prevent members’ retirement savings from being depleted due to debts, which could arise due to reasons such as business failures. Creditors should therefore not expect members to use their CPF savings to settle their debts. For the same reason, we do not allow members to withdraw their CPF savings to settle their debts.
Members who need help to manage their legal unsecured debts can approach Credit Counselling Singapore (CCS) for assistance. CCS is a voluntary welfare organisation that helps with debt management and can be contacted at 6225 5227 or email enquiry@ccs.org.sg. Members may also approach their creditors directly and work out a repayment plan or a lump sum payment. Members who do not have sufficient income or assets (excluding CPF) to repay the debt may consider filing for bankruptcy with the High Court. If the debt owed does not exceed $100,000, the High Court may refer the member to the Official Assignee for possible placement in the Debt Repayment Scheme (DRS). Once a member is on the DRS, the interest on the debt stops accruing. More information on the DRS can be found on MinLaw’s website. Members who do not qualify for DRS would have their bankruptcy application approved and will be placed under the differentiated discharge framework which creates a rehabilitative environment for bankrupts by setting a reasonable timeline for discharge on the condition that they keep to their payment plan while under the regime.
