Monday, November 05, 2007

Do you understand all the CPF rules?

I thought I did. Over the years I've collected a shelve full of little information booklets from the Tampines CPF Office. I have read every line in the booklets like a school kid studying for his exam. I thought I knew everything about the CPF...until I read this Straits Times forum letter....then I realised that I knew next to nothing - those little booklets cannot possibly contain the whole masterpiece ......not even a smal fraction.

If you think you know alot about CPF, read this....
Heirs of late co-tenant lose out under CPF rules

I AM the administrator of my late brother's estate. He had a 97 per cent share in a Tampines maisonette, while the co-tenant, his acquaintance, held the remaining 3 per cent. The resale flat was bought for $432,000 in 1999. My brother used some $69,000 of his CPF money while the co-tenant contributed about $17,000.
After my brother's death, when I inquired about selling the flat, HDB officers told me the proceeds from the sale would be distributed according to share ownership. We subsequently decided to sell the flat and found a buyer in June at a sale price of $380,000.
Only at the final appointment to complete the sale in late September, did I learn that the HDB and CPF Board do not take into account the big amount of CPF funds my brother used to buy the flat when computing his estate's share of the sale proceeds. Because he is dead and has no CPF account, that money is treated as if it did not exist.
To explain, after deducting some $323,000, mainly to pay back the HDB loan, the co-tenant got back all his CPF money plus interest - $21,500 - while the estate got back nothing of my brother's CPF money.
This is contrary to what I was told by HDB officers who said the sale proceeds after HDB loan repayment would be divided according to ownership, that is, 97 per cent and 3 per cent. I was told there would be no need for any refund of CPF money to my brother's account, as he is dead, and proceeds would be returned in cash. At no time was I told by these agencies that, under current procedures, they would act as if only the surviving tenant would get back what he or she had paid out in CPF money.
I have written to the CPF Board, which replied with a reiteration of the present procedure - that on a member's death, the CPF withdrawn towards an HDB flat ceases to be refundable. It did not say why this money cannot be returned to the estate in cash.
I did not know this CPF money is not refunded to the deceased's estate in cash. Thus, his beneficiaries, who may need this money to carry on, lose out.
Take another example of two people who buy an HDB flat 50-50 as co-tenants with each using $100,000 of his CPF money. One dies and the flat is sold. After repayment of the outstanding mortgage, there is a balance of $100,000. This entire amount will go to the surviving tenant as a refund of CPF withdrawn. The beneficiaries of the deceased flat owner will get nothing.

Ann Williams

To better appreciate the above letter, one should have a good understanding of the difference between joint ownership & co-tenancy. Here is a good writeup :


Anonymous said...

hi there.

am abit blur about the 'moral of the story'.. is it that the deceased entered a 'tenants in common' arrangement, but heirs of his estate did not get the CPF money paid to the flat when the flat was sold as CPF/HDB, as a rule, do NOT return the CPF money TO people who are dead and have no CPF accounts??? i.e. CPF/HDB do not return CPF money even if the deceased willed the property to an estate?

James Chia said...

Oh dear! I didn't know about this either! So if after repayment of the outstanding mortgage, there is a balance of $120,000, does that mean this entire sum goes to co-tenant and still nothing for the beneficiary?

Anonymous said...

I am sure there are many people who bought HDB flats with co-tenants without realising the implications. It is only when cases like this pop up that people became aware of their position. And now I dont's think the family of the deceased will get anything back because the house automatically belongs to the surviving tenant.

Aaron said...

It's not an issue with CPF. The issue arose because of the type of agreement made with HDB on the type of tenancy agreement. I was just reading the letter sent to me regarding the new HDB flat I'm about to purchase and this thing struck me immediately, although I can imagine that it didn't strike some people. I'll probably do a scan of that document and post it online to create awareness about this issue.

LuckySingaporean said...


Plse do so. I think some public education is needed. Even if it is legally true, the logic is almost beyond me.

Anonymous said...

psst... i think what air-ron was trying to say is that it is not cpf board that does not return the $$$, IT IS THE HDB THAT IS GREEDY!

jeez, it never struck me that HDB can be so money-oriented... LOL