close to home.
No CPF for studies abroad THE Government will not allow parents to use their Central Provident Fund (CPF) savings to pay for their children's overseas education because it fears that these parents will be left with little retirement savings should the children not repay the money.
Under the current scheme, CPF monies can be used to pay for children's education in local universities, but not all children pay back the monies to their parents' accounts, revealed Education Minister Ng Eng Hen yesterday at a dialogue with Pasir Ris residents.
He was responding to a question from resident Mohd Anuar, who asked the Government to reconsider the policy, to ease the burden of parents who send their children for studies abroad.
CPF members can use up to 40 per cent of their Ordinary accounts to pay for their children's education in local tertiary institutions, but not foreign ones.
'The CPF issue is a difficult one. I know how parents feel; they love their children very much and feel very responsible,' said Dr Ng. 'If we allow the CPF to be used for overseas education, I know that a lot of parents will use that money.'
Joining the discussion, MP for Pasir Ris-Punggol GRC Ahmad Magad revealed that both his daughters used his CPF savings for their local university education
5 per cent of graduates defaulted on CPF loans
SINGAPORE - After leaving university, a graduate owed $4,700 that he used from his mother's Central Provident Fund (CPF) account before he finally got in touch with the CPF Board to start monthly repayments of $200. He then had to defer payment, citing personal reasons, before he eventually repaid the loan in one lump sum.
The graduate is one example out of an average of 450 local graduates per year who fail to repay these loans for four consecutive months since the CPF Education Scheme started in 1989.
Responding to media queries, the CPF Board disclosed yesterday - based on data till 2006 - that out of 153,000 graduates who tapped their parents' CPF monies to pay for tertiary education here, 5 per cent have defaulted on their loans.
The fact that not all children repay these CPF monies was cited by Education Minister Ng Eng Hen at a dialogue session on Sunday when asked if CPF could be used to fund overseas education.
His worry was that some parents might not have enough money for retirement if this were allowed.
Those enrolled in local tertiary institutions can use up to 40 per cent of their parents' CPF Ordinary accounts to fund their education.
The scheme has flexible instalment plans - ranging from one to 12 years with a minimum monthly repayment of $100, starting one year after they graduate.
If graduates are unable to start repayment due to full-time studies, National Service or unemployment, they can opt for temporary deferment.
Usually, what the CPF Board can do to "protect the interest and financial security of older CPF members" is to send their children reminder letters, "encouraging" them to be prompt in repayment.
Some parents, though, are willing to write off their children's "debt".
This is allowed for parents who are 55 years and above and who have enough for the Minimum Sum and the prevailing Medisave Required Amount in their CPF accounts.
For instance, engineer Tan Teow Seng, 55, whose daughter recently graduated, waived repayments as she is making monthly cash contributions to the household.
His wife, Mdm Julie Kee, told MediaCorp it was the couple's "duty" to see her through university. They will do the same for their younger daughter.
Still, Mrs Josephine Teo, who chairs the Government Parliamentary Committee for Education, felt that more can be done to tackle the issue of defaulters, such as using the child's CPF monies to repay his parents' CPF savings.
"I wouldn't rule out this option for chronic defaulters. The graduate still has time to build up his career and CPF savings. Priority should be given to aged parents," said Mrs Teo, who described the number of defaulters here as "sizeable".
But she also recognised that
some graduates may treat this as a way to increase their discretionary spending. *****you should read THE STRAITS TIMES hardcopy, some defaulted not because "they cannot afford it" some defaulted to pursue their material wants, get a car, get apartment etc
not to say they cannot pursue their wants, but i worry for the elderly parents.
are they VERY SURE they can support their elderly parents when they are in their twilight with NOT MUCH RETIREMENT money left BECAUSE the kids never add back for them?
if the kids really need money for NEEDS such as wedding then it cant be helped but for MATERIAL WANTS?
in reality, studies are not cheap, even a local degree cost more than 20K
overseas? 40-100K depending on years of studies.
imagine the kids decided to take advantage of the parents' CPF citing all reasons and THEN REFUSED to support them when they are unable to take care of themselves.
this is not a matter of "parents' duties"
its a matter of "child's duties"
old fashioned it may sound isnt this filial piety all about?
OR ELSE another scenarior, the parents are very capable and cash rich, that's another story all together.
