RES exam question on Financing: Mrs Chen turns 55 in 2026 with $200,000 in her CPF Ordinary Account (OA) and $80,000…
Mrs Chen turns 55 in 2026 with $200,000 in her CPF Ordinary Account (OA) and $80,000 in her Special Account (SA). For her cohort the Basic Retirement Sum (BRS) is $110,200 and the Full Retirement Sum (FRS) is $220,400. She owns a completed private property with 40 years of lease remaining and an outstanding bank mortgage of $100,000. Consider: (i) Because the lease lasts until she is 95, she may apply to keep only the BRS in her Retirement Account, pledging the property. (ii) Once she keeps the retirement sum that applies to her, she may apply to withdraw savings above it in cash. (iii) The CPF Board will transfer her SA and then OA savings into a new Retirement Account, up to the FRS of $220,400, without her applying. (iv) Mrs Chen cannot use her CPF OA savings to service the outstanding bank mortgage on her private property. Which combination of statements is correct?
- A(i), (ii) and (iii)
- B(ii), (iii) and (iv)
- C(i) and (ii) only
- D(i) and (iii) only
Show answer & explanation
Answer
A. (i), (ii) and (iii)
Explanation
Issue: what happens to Mrs Chen's CPF savings at 55, and what her property allows. Rule: at 55 the CPF Board transfers SA savings, then OA savings, into a new Retirement Account (RA), capped at the FRS; no application is needed. A member whose property has a remaining lease lasting her to at least 95 may then apply to withdraw RA savings down to the BRS, pledging the property for the gap (CPF Board, 'Withdrawal of RA savings for property owners', updated 11 May 2026). For members turning 55 in 2026 the FRS is $220,400 and the BRS $110,200 (CPF Board). Application: her $280,000 covers the FRS, so $220,400 moves to the RA automatically: (iii) is correct. 55 + 40 = 95, so the lease test is met and (i) is correct; after keeping the BRS she may apply to withdraw the rest, so (ii) is correct. Conclusion: (i), (ii) and (iii).
Why the other options are wrong
- (iv) is wrong: OA savings can pay instalments on a private-property bank loan.
Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR
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