When a person passes away, many questions arise about their finances and assets, including what happens to their Central Provident Fund (CPF) savings. This article aims to provide a comprehensive overview of what happens to CPF after death, covering various scenarios and implications.
CPF Before and After Death
The CPF is a mandatory savings scheme in Singapore that helps individuals save for their retirement, healthcare, and housing needs. CPF contributions are made by both employers and employees, and the funds are accumulated in three separate accounts:
- Ordinary Account (OA) – Withdrawals can be used for various purposes, such as housing, education, and healthcare.
- Special Account (SA) – Withdrawals are restricted to retirement purposes.
- Medisave Account (MA) – Withdrawals are used to cover healthcare expenses.
Upon death, the balances in the CPF accounts are subject to different rules and procedures.
1. CPF Nomination
A CPF nomination allows individuals to specify how their CPF savings should be distributed after their death. This nomination can be made through the CPF website, service centers, or via a will. Without a CPF nomination, the distribution of CPF savings will follow intestacy rules.
2. Distribution of CPF Savings
The distribution of CPF savings after death depends on whether there is a valid CPF nomination.
With CPF Nomination:
- The nominated beneficiaries will receive the CPF savings according to the specified proportions.
- Any unnominated balance will be distributed to the legal next-of-kin following intestacy rules.
Without CPF Nomination:
-
The CPF savings will be distributed to the individual’s legal next-of-kin in the following order:
- Spouse
- Children
- Parents
- Siblings
- Grandparents
- Aunts and uncles
- Cousins
3. Tax Implications
CPF savings are generally not subject to income tax. However, when CPF savings are withdrawn after death, they may be subject to estate duty if the total value of the deceased’s estate exceeds the prevailing estate duty threshold.
4. Special Considerations
CPF Life:
- CPF Life is an annuity scheme that provides monthly payouts to retirees.
- Upon the death of a CPF Life member, the remaining CPF savings will be used to purchase a posthumous CPF Life annuity for the nominated beneficiaries.
CPF Housing Scheme:
- If the deceased owned an HDB flat or private property using CPF savings, the property can be passed on to the legal next-of-kin or sold to repay the outstanding housing loan.
Tables
Table 1: CPF Withdrawal Options for Different Account Types
| Account Type | Withdrawal Options |
|---|---|
| Ordinary Account (OA) | Housing, education, healthcare, etc. |
| Special Account (SA) | Retirement purposes only |
| Medisave Account (MA) | Healthcare expenses only |
Table 2: Distribution of CPF Savings with CPF Nomination
| Beneficiary | Proportion |
|---|---|
| Spouse | 50% |
| Children | 25% |
| Parents | 15% |
| Others | 10% |
Table 3: Distribution of CPF Savings without CPF Nomination
| Legal Next-of-Kin | Priority |
|---|---|
| Spouse | 1 |
| Children | 2 |
| Parents | 3 |
| Siblings | 4 |
| Grandparents | 5 |
| Aunts and uncles | 6 |
| Cousins | 7 |
Table 4: Estate Duty Thresholds
| Year | Estate Duty Threshold |
|---|---|
| 2023 | S$2.3 million |
| 2024 | S$2.4 million |
| 2025 | S$2.5 million |
Conclusion
Understanding what happens to CPF after death is crucial for individuals to plan their finances and ensure their assets are distributed according to their wishes. By making a valid CPF nomination and considering potential tax implications, individuals can ensure a smooth and hassle-free distribution of their CPF savings after their passing. It is advisable to consult with financial professionals or legal advisors for personalized guidance on CPF matters.
