27 Mar 2023

SOURCE: CPF Board

To many, financial planning means saving for retirement, building wealth through investments, and managing their housing mortgage. However, one crucial aspect of financial planning that often gets overlooked is legacy planning.

Legacy planning consists of making arrangements for the allocation of your assets after you pass away. With a proper legacy plan, your assets will be distributed according to your wishes while also helping to preserve family harmony. In Singapore, this includes making a CPF nomination.

What is a CPF nomination?

A CPF nomination allows you to:

· Select the individuals who will receive your CPF savings

· Specify the percentage of the funds each nominee should receive

So why is making a CPF nomination so important? For starters, a CPF nomination allows you to distribute your CPF savings according to your wishes.

Just like how you stay abreast of your bank’s interest rates for the best returns and the latest tips to better budget your expenses, it’s also important to take stock of your CPF nomination regularly as part of good financial planning. After all, your life circumstances might change over time. 

1.   Easier and quicker distribution of CPF savings for your nominees

Unknown to many, your CPF savings are not covered by a will as they do not form a part of your estate. This arrangement is there to protect your CPF savings from creditor claims on any outstanding debts you may have and preserves your savings for your nominees.

This then makes it necessary to make a CPF nomination if you want your funds to be properly distributed after your demise.

Your CPF nomination covers:

• CPF savings in your Ordinary, Special, MediSave, and Retirement Accounts
• CPF LIFE unused premiums
• Discounted Singtel shares

What is not covered under a CPF nomination:

1. Properties bought using your CPF savings
2. Payout from Dependants’ Protection Scheme (DPS)
3. Investments and returns made under CPF Investment Scheme

If you have made a CPF nomination, the CPF Board will contact your nominee(s) within 15 working days from the notification of your demise to distribute your CPF savings.

Your nominee(s) can then apply to make a withdrawal from your account and receive your CPF savings in cash or GIRO.

If your nominee is below 18 years old at the time of your death, the money due to them will be held-in-trust by the Public Trustee’s Office until they turn 18. 

Choose your CPF Nominee(s) carefully

It’s important to consider the choices of your nominee(s) carefully, especially if the savings are intended for your dependent’s livelihood. This makes it a good practice to review your CPF nomination regularly and make changes based on your latest circumstances. 

If you have not made a CPF nomination, your CPF savings will be paid to the Public Trustee Office for distribution in cash to your family member(s) in accordance with the intestacy laws or inheritance certificate (for Muslims) in Singapore. Your loved ones will then need to make an online application with the Public Trustee’s Office for your CPF savings to be distributed to them.

This process can take up to six months for the Public Trustee Office to identify which of your family members are eligible to claim your CPF savings.

According to the Insolvency and Public Trustee Office (IPTO), the total amount of un-nominated CPF savings left unclaimed with IPTO reached $135 million at the end of 2021. This is despite efforts made by IPTO to reach out to the rightful beneficiaries. 

2. No transaction fees 

Making a CPF nomination is free. On top of that, the CPF Board does not charge any fees to distribute your CPF savings in the event of your demise.

However, if you have not made a CPF nomination, the Public Trustee Office charges an administration fee to distribute your un-nominated CPF savings. 

Source: Ministry of Law

The fee, which cannot be waived, will be deducted directly from your CPF savings and includes GST.

The transaction fees can add up significantly, with a charge of $900.72 for $100,000 of CPF savings. This can be an even higher amount if there are more CPF savings to be distributed. 

3. Privacy and disclosure of CPF information according to your wishes

In the event of your passing, your next-of-kin may wish to be informed about the amount of CPF savings you have amassed, the identities of your nominees, or the respective amounts allocated to them.

To safeguard your confidentiality, only your nominees will be informed of the exact sum they will receive. They will not know about the overall amount of your CPF savings or the identities of any other nominees you may have selected.

While this measure protects your privacy, it may sometimes cause dissatisfaction among those who are not nominated. You can avoid this by opting to grant specific permission for selected individuals to access your CPF account information after your passing. Otherwise, your account information and nomination decisions will remain undisclosed.

Making a CPF nomination 

Online 

1)    Visit the CPF nomination page online

2)    Add your nominee details (Name, NRIC/FIN/Relationship/Share to allocate)

3)    Confirm disclosure of CPF information

4)    Add witness details. Notifications will be sent to your witnesses, and they must declare their knowledge of the online nomination within 7 days. They can choose to do it anytime and anywhere, as long as it is within the 7-day window. 

In person 

1)    Book an appointment to visit any of the five CPF Service Centres located island wide

2)    Bring along your NRIC or passport, and photocopies of your nominees’ identification documents

3)    Complete your CPF nomination form in the presence of two witnesses. Our Customer Service Executives can also act as your witnesses

Witnesses for your nomination

To ensure that the CPF nomination was conducted willingly and without any influence or pressure, it is essential to appoint two witnesses for your nomination. These witnesses must meet the following criteria:

• Be at least 21 years or older
• Possess mental capacity
• Have a Singpass

Neither you nor your CPF nominees can serve as witnesses for your nomination. 

Other legacy planning matters to consider as part of regular financial planning

Conducting regular check ins on your legacy planning can go far in ensuring that the needs of your loved ones are properly allocated and accounted for in the event of your demise. Here are some which can be helpful:

Lasting Power Of Attorney (LPA): The LPA is a legal document that enables a person to voluntarily designate one or more individuals (donee) to make decisions and act on their behalf in the event that they lose mental capacity in the future. The donee can be appointed to act in two main areas: personal welfare and property & affairs matters.

Reduced Life Expectancy Scheme: In the unfortunate event that you have been diagnosed by an accredited doctor with a medical condition that has reduced your life expectancy, you are eligible to apply for the withdrawal of some of your CPF savings.

Home Protection Scheme (HPS): Designed for CPF members who own an HDB flat and are using their CPF savings or cash to pay for their monthly household instalments, this mortgage-reducing insurance covers members from losing their flat in the event of death, terminal illness, or total permanent disability.

Dependant’s Protection Scheme (DPS): This term life insurance scheme provides basic financial protection for you and your family in the event of death, terminal illness, or total permanent disability.

DPS is solely administered by Great Eastern Life and is automatically extended to you upon your first CPF working contribution if you're a Singapore Citizen (SC) or Permanent Resident (PR) between age 21 and 65. 

CPF nomination as part of your financial planning 

Making a CPF nomination early on and making sure you review it regularly is an essential part of financial planning in Singapore.

With benefits such as having your CPF savings distributed seamlessly to your chosen beneficiaries without transaction fees and the privacy to control the disclosure of your CPF information according to your wishes, any CPF-related disputes or complications can be potentially avoided upon your passing. 

Information in this article is accurate as at the date of publication.