Q I UNDERSTAND that the only asset a bankrupt can continue to own is the money in his or her Central Provident Fund (CPF) account.
What happens if a bankrupt withdraws his CPF savings on reaching 55? Does he or she have to declare the withdrawn money to the Official Assignee (OA) and surrender it?
A You are correct in saying that a bankrupt can continue to own his or her CPF account.
When you reach 55 and withdraw your CPF savings, you are not obliged to inform the OA about the money, let alone surrender it to him.
As a bankrupt, you can also own an existing Housing Board (HDB) flat or buy one.
There is no need to apply to the OA for consent to buy HDB flats that are of five rooms or smaller.
However, if you intend to buy an HDB executive/maisonette flat, you must obtain the OA's approval and similar consent is required for all bankrupts who want to sell their HDB flat. They may also continue to own term life insurance policies with no cash value. Life insurance policies with cash values will be taken over by the OA.
Certain property is protected against your creditors by law, which means it cannot be sold or taken over by the OA.
They include trust property, HDB flats, CPF contributions, necessary household furniture, personal effects, limited tools of trade, life insurance policies that are expressly for the benefit of your spouse or children and compensation awarded for personal injuries or wrongful acts against you.
Under the CPF Act, CPF money withdrawn by a bankrupt on reaching 55 is protected from creditors.
You may apply to withdraw your CPF savings at 55 but you have to first set aside the following three amounts before withdrawing the excess in one lump sum:
Amount to meet living expenses between age 55 and 62, which is about $30,000. Amount to meet retirement needs from age 62 (that is, the Minimum Sum which is $94,600). Amount to meet hospitalisation expenses (that is, Medisave Required Amount which is $8,300) or Medisave Minimum Sum ($28,000), whichever is higher. If you are unable to set aside the above amounts at age 55 or after, you will be able to withdraw only a monthly payment which is based on the Minimum Sum monthly payout for a member who retires in the same year you turned 55.
However, CPF savings (other than the three amounts mentioned above) used for the purchase of private property, are not protected from the mortgagee when the bankrupt reaches the age of 55.
Leong Sze Hian
President
Society of Financial Services Professionals
