What Is CPF?
Young or old, CPF is important to you as it concerns your pay contributions and future benefits.
Firstly, a quick lookup on CPF will lead you to the definition that The Central Provident Fund (CPF) is a comprehensive social security savings plan implemented by the government, compulsory for all Singaporeans.
In short, CPF is implemented to ensure that Singaporeans save up the important things — retirement, housing, and healthcare. Let’s face it, way more Singaporeans believe that they are disciplined enough to save up for retirement, but not many actually manage to do so.
The allocation of CPF is not that difficult to understand, despite the chunk of information presented to you on the CPF website. In fact, all your contributions and the allocation rates of your monthly pay can be summarised below:
Introduction to CPF allocation:
- An employee will contribute 20% of wage to their own CPF account.
- Employer will contribute an addition 17% of whatever their wage will be to their CPF account accordingly.
So: 20% from you + 17% from boss = 37% of total wage goes into CPF
- The CPF account will then be allocated to 3 different accounts.
- Ordinary Account (OA)
- Special Account (SA)
- Medisave Account (MA)
Its uses are as follows:
|Accounts||Usage||Interest Guaranteed||Contribution Rates|
|Ordinary Account (OA)||Housing, Investments, Education, Approved Insurance||2.5%||Age < 35: 23%
Age 34-45: 21%
Age 45-50: 19%
Age 50-55: 15%
|Special Account (SA)||Old Age/ Retirement-related financial products||4%||Age < 35: 6%
Age 34-45: 7%
Age 45-50: 8%
Age 50-55: 11.5%
|Medisave Account (MA)||Hospitalisation expenses, Approved medical insurance||4%||Age < 35: 8%
Age 34-45: 9%
Age 45-50: 10%
Age 50-55: 10.5%
Things To Take Note:
- The percentage allocated to each account changes as you age
- After age 55, the contribution rate for both employee and employer decreases.
What Happens At age 55? CPF Retirement Sum etc.
At age 55, your Ordinary Account (OA) and the Special Account (SA) will combine to form your Retirement Account (RA)
From there, there’s 3 scheme you can choose from depending on the Retirement Sum in your Retirement Account.
|CPF Payout Scheme (3 Tiers)||CPF Minimum Sum To Have||Action:||Monthly Payout|
|Basic Retirement Sum||$83,000||If you own a property, you can withdraw the difference (CPF minus $83,000)||$700 - $750|
|Full Retirement Sum||$166,000||If you have no property or Choose not to withdraw||$1,280 - $1,380|
|Enhanced Retirement Sum||$249,000||Top-up into CPF Life||$1,860 - $2,000|
Withdraw/ Keep CPF:
- Withdraw the difference after you choose to set aside money for Full Retirement Sum or Basic Retirement Sum with property charge/pledge.
- Keep the savings in CPF to earn interest.
Things to take note:
- For the first $30,000 of combined CPF balances, an extra 1% interest will be given. This is on top of the existing 1% extra interest on the first $60,000 of combined CPF balances. Combined CPF Balances is the sum of Ordinary, Special, Medisave and Retirement Account.
- Under the Retirement Sum Topping-Up Scheme, you can top up the CPF of your loved ones in order to reap more total payouts together
- CPF Life provides CPF members with a monthly payout for life when they reach their payout eligibility age
- Not withdrawing your CPF allows you to continue earning interest from your CPF. Grow money!
Basic Retirement Sum In Years To Come
As of 2020, the Basic Retirement Sum is currently set at
Year you are age 55 in Basic Retirement Sum
Disclaimer: Do expect the sum to increase to account for long-term inflation and rising standard of living.