The minimum sum(MS) for your CPF account will be raised from 1st of July 2009 from the existing $106,000 to $117,000. The new MS will apply to CPF members who turn 55 from 1 July 2009 to 30 June 2010.This is in line with the Ministry of Manpower’s annoucement in August 2003 that the CPF Minimum Sum will be gradually raised to $120,000 by year 2013.

Minimum Sum was introduced to curb inflation and to ensure that Singaporeans have set aside sufficient savings for their retirement.

How Will the Minimum Sum Affect Property Buyers who is using CPF

Having an increased MS in CPF means you would have to set aside more funds in CPF (can be in the form of both Special Account and Ordinary Account) if you are using CPF to buy a second property. You can wipe out your Ordinary Account for your first purchase of a property with your CPF account, but if you’re using CPF to purchase your second home, you’ll have to set aside $58,500 (SA or OA) in your account. This is applicable to your spouse or friends whom you might purchase the 2nd property under tenancy-in-common.

Under the approved Residential Properties Scheme (RPS), you can utilise your CPF OA savings for the following:

1. To pay 100% of the Valuation Limit (VL). The VL is the lower of the purchase price or the value of the property at the time of purchase.
2. To refinance your housing loan taken for the purchase of a residential property
3. To pay your monthly instalments on your existing house loans.
4. To pay all stamp duty, valuation and legal fees on transfer or conveyance for the purchase or mortgage of a property.

The CPF Board has a very comprehensive breakdown on how the Valuation and Withdrawal Limit works on their website.