In Singapore, the Central Provident Fund (CPF) plays a vital role in ensuring financial security for citizens, covering retirement, healthcare, and housing needs. As part of this national social security system, there are several schemes and contributions to understand, one of which is the Dependants’ Protection Scheme (DPS). Many CPF members may wonder: from which CPF account are DPS premiums deducted? Understanding how DPS works, which account it draws funds from, and what it offers can help CPF members manage their savings effectively and ensure that essential insurance coverage remains uninterrupted.
Understanding the Dependants’ Protection Scheme (DPS)
What is DPS?
The Dependants’ Protection Scheme (DPS) is a term-life insurance scheme administered by CPF Board-appointed insurers. It provides a basic form of insurance for CPF members, offering a payout to the insured’s family in the event of death, terminal illness, or total permanent disability.
DPS coverage is automatically extended to all eligible CPF members upon their first CPF contribution. The scheme is optional, but members are enrolled by default unless they opt out. As of recent updates, the maximum sum assured under DPS is S$70,000 for members up to age 60, reducing to S$55,000 for members between 60 and 65 years old.
Why DPS Is Important
DPS provides essential financial protection for families and dependants. It ensures that in the unfortunate event of the insured member’s passing or permanent disability, their loved ones are not left without financial support. The payout can help cover living expenses, medical costs, or outstanding loans.
Which CPF Account Is Used for DPS Deductions?
Primary Account for DPS Deduction
DPS premiums are primarily deducted from the CPF Ordinary Account (OA). If there are insufficient funds in the OA, the deduction will then be made from the Special Account (SA). This automatic deduction system ensures that members remain covered as long as their CPF balances can support the premiums.
- First deduction: CPF Ordinary Account (OA)
- Secondary deduction: CPF Special Account (SA), if OA has insufficient funds
What If Both Accounts Have Insufficient Funds?
If both the OA and SA have insufficient balances to cover the DPS premium, the insurer will notify the member. In such cases, members are typically given the option to pay the premium through alternative means such as GIRO, AXS, or direct payment to the insurer. Failure to make payment may result in policy termination, and the member would lose DPS coverage unless reinstated later.
How Much Are DPS Premiums?
Premium Rates by Age
DPS premiums are age-based and typically increase as the member gets older. Below is an indicative breakdown of the annual premiums:
- Age 2125: S$18
- Age 2630: S$30
- Age 3135: S$42
- Age 3640: S$54
- Age 4145: S$96
- Age 4650: S$144
- Age 5155: S$228
- Age 5660: S$298
- Age 6165: S$298 (for reduced sum assured)
These premiums are subject to change depending on the insurer and scheme updates. Members can log in to their CPF accounts to view current premium amounts and deductions.
How to Check Which Account Was Deducted
CPF Transaction History
Members can easily verify from which account their DPS premiums were deducted by checking their CPF transaction history. This can be accessed through the CPF website or mobile app. The deductions will be clearly labeled, indicating whether the funds came from the OA or SA.
Insurance Provider Communication
The insurer administering the DPS, such as Great Eastern Life (as of recent appointment), may also send annual policy statements or premium notices. These documents can offer a summary of deduction sources and next payment dates.
Voluntary Payment Options
Manual Payments
If you prefer not to have your CPF accounts automatically debited or if your accounts lack sufficient funds, you can pay the premiums voluntarily. Payment can be made through:
- GIRO arrangements
- AXS machines
- Online platforms supported by the insurer
- Bank transfer or direct debit services
Choosing to Opt Out
While DPS is beneficial, CPF members have the choice to opt out of the scheme. If you believe you have sufficient private insurance coverage, or if you no longer wish to pay premiums, you can submit a withdrawal form to the insurer. However, doing so removes the financial protection offered under DPS.
DPS and Retirement Planning
Impact on CPF Balances
While the annual premium is relatively small, it’s essential to understand how recurring deductions affect your CPF balances, especially if you are planning to use the funds for housing or other purposes. Keeping track of these deductions can help ensure better budgeting of CPF funds.
Ensuring Continuity of Coverage
During retirement, CPF contributions may cease, and balances might reduce. Members are encouraged to monitor their accounts to ensure there are still sufficient funds to keep DPS active or to explore other insurance options suitable for retirees.
Steps to Manage Your DPS Premium Deduction
- Check your CPF account balance regularly to ensure sufficient funds for DPS deduction.
- Read policy notifications from your insurer about upcoming premiums and due dates.
- Update your contact details to receive timely alerts about DPS payments.
- Review your insurance needs periodically to determine whether DPS still fits your financial goals.
The Dependants’ Protection Scheme offers valuable insurance coverage to CPF members, and understanding from which CPF account the premium is deducted is important for proper financial planning. The CPF Ordinary Account is the default source of payment, with the Special Account used if necessary. Monitoring your balances and being proactive about your DPS payments ensures continued protection for you and your loved ones. With clear knowledge of how DPS interacts with your CPF savings, you can make informed decisions that align with your long-term security and financial objectives.