Division of CPF-Related Assets in Matrimonial Proceedings Part IIIA of the CPF Act Introduction Changes to CPF Act introduced

d on 1 Oct 2007 o Part IIIAdivision of CPF-related assets in matrimonial proceedings o CPF (Division of Fund-Related Assets in Matrimonial Proceedings) Regulations 2007 (GN S 502/2007) (the 'New Regulations') New laws give cts more flexibility when dividing CPF-related m-assets Principle: no premature withdrawal of a member's CPF assets and no leakage from the CPF system as a whole. Types of CPF-related assets moneys standing to the credit of a member in the Fund; any immovable property for which CPF moneys have been withdrawn for the property; and 3 any investment made under the CPF Investment Scheme ('CPFIS'). The types of relief that may be ordered by the courts as set out in Part IIIA include: the transfer of a member's CPF moneys to designated CPF account(s) of the spouse; the payment of a member's CPF moneys to his spouse (the current 'charging orders'); the transfer (other than by way of sale) of the member's interest in an immovable property to the spouse with the court having the discretion to determine the amount of CPF refunds to the member's account upon the transfer; and the transfer (to the spouse), provided the investment is transferable, or sale of an investment made by a member under CPFIS. Application of new laws Ct orders made on or after 1 Oct 2007 for division of m-assets under s 112 WC o Maintenance orders excluded CPF-related assetsreliefs available CPF moneys o Transfer order: The court may order that a member's CPF moneys be transferred to the spouse's CPF account(s) CPF Board (the 'Board') may pay the court-ordered amount to a spouse after the member's entitlement to withdraw his CPF or death, whichever is earlier, and upon the spouse applying to withdraw the moneys. In addition to the option of charging orders (this option is also available to foreign spouses) Transfer/charging order can be made to take effect immediately or upon payment or refunds to a member's account(s). The Board has to be properly notified after the payment or refunds have been made before it needs to comply with the order Ct must decide on amount to be transferred and specify the members account for this purpose

Spouses acct need not be specified at this point in time (New Regulations) Loans or grants taken by member which are repayable or refundable to the Government will be deducted from the member's CPF moneys before the transfer or payment can take place Details can only be sought from member since this is not reflected in CPF statements Transfer of moneys o Advantage of transfer order (for SG/PR spouse) Not dependent on member satisfying withdrawal conditions under CPF laws Takes priority to the members right to withdraw or transfer his CPF moneys and the CPF Boards right to make deductions from the members accounts **Note that members participation in CPF schemes will be affected if he has insufficient moneys remaining after the tsf (e.g. insurance policies may lapse) Fast Board will tsf moneys as soon as practicable after it has been duly served (manner prescribed in New Reg) After a transfer, the moneys are considered part of the spouse's CPF contributions which she can use under CPF laws. She can only withdraw them as cash when she satisfies the usual withdrawal conditions under the CPF Act Charging order o SG or PR spouse may apply o Spouses entitlement under a charging order subject to members obligations to set aside minimum sum, Medisave minimum sum and other requisite sums under CPF laws (same position as pre-2007) o Charging orders may seem more viable if the member is nearing 55 years and there are sufficient moneys in his CPF account to pay the spouse in cash. Where the member is still relatively young, the spouse may prefer to have immediate access to the moneys in her own CPF accounts which she can use for approved purposes, for example, the purchase of immovable property. o Foreign spouses Can only get charging order Same benefit as SG/PR and spouses entitlement under charging order not subject to member first having to set aside various prescribed sums under CPF laws Moneys in all CPF accounts can be charged although the foreign spouse has to wait till the member is entitled to withdraw his CPF before she obtains the cash

Immovable properties Under the new laws, when the member is to transfer his share of the property to his spouse, the court has the discretion to decide on the amount, if any, of the CPF contributions to be refunded to the member's account before the transfer can take place.

o This option is available where the spouse is a Singaporean or PR and the transaction is not a sale. SS 27CF: slight differences in the various sections arise from o whether the property involved is a HDB property or private property o Whether the current CPF charge on the property secures the minimum sum only or moneys withdrawn for the purchase of the property as well Underlying framework similarany moneys withdrawn by the member for the purchase of the property, but not refunded upon transfer to the spouse, will have to be subsequently refunded by the spouse when she sells the property

Illustration To illustrate, assume a member had used $100,000 for the property (including interest) while the spouse had used $50,000 from their respective CPF accounts. The court ordered the member to transfer his share to the spouse and $20,000 to be paid to his CPF account upon the transfer. The member, spouse or any third party could be ordered to refund the $20,000 to the member's CPF account. Loans or grants repayable to the Government have to be refunded as well. When the property is subsequently sold by the spouse, she would have to refund into her own CPF account the following sums: o 1 The $50,000 she had withdrawn (with accrued interest); and o 2 The $80,000 that was not refunded to the member's account at the time of the transfer (with accrued interest). As the refunds are from the sale proceeds, should the property be sold subsequently at a loss, only the net sale proceeds would have to be refunded, provided the sale is at fair market value. This is in line with the current practice by the Board. Further, the current rules do not require a refund of the full principal and interest withdrawn if the property is sold when the owner is over 55 years of age. Only the minimum sum covered by the property charge is required to be refunded. This rule will also continue to apply to refunds to be made by the spouse. For the sale and transfer of properties that do not fall under the new regime, the full CPF refunds are to be made to the respective parties' CPF accounts.

CPFIS investments How to transfer investments to the spouse? o Spouse must be SG citizen or PR o Spouse must be eligible to own investments under the various investment schemes (i.e. above 21 years old) o Spouse must hold investment acc with agent bank When the spouse subsequently sells the investments, proceeds will be dealt with in accordance with CPFIS regulations Court can also order sale of the members CPF investmentsdivision of proceeds after they have been refunded proceeds can then be dealt with in accordance with CPFIS regs o Obligation on member to effect the sale

In summary, the obligations of a member when there is an order for transfer of proceeds from sale or disposition of investments are as follows: o 1 Initiate sale by instructing financial intermediaries; o 2 Instruct agent bank to effect refund of moneys to his CPF OA after investments have been sold; o 3 Notify the Board of the refund of investment proceeds to his CPF account(s); and o 4 Ensure that contents given in the notification form are true and correct. The Board will only transfer sale proceeds after it receives the notification.