CPF Minimum Sum to go up from July 1
Members will have to keep $106k in retirement savings
CENTRAL Provident Fund (CPF) members who turn 55 between July 1 this year and June 30 next year will have to set aside a higher Minimum Sum of $106,000 in their Retirement Accounts.
The CPF Board said in a statement that these individuals will receive monthly payouts of $910 starting from the age of 64, for about 20 years.
The current CPF Minimum Sum that must be set aside in the accounts is $99,600. This provides members a monthly payout of $790 from the age of 64.
The higher requirement follows an announcement in 2003 that the amount which must be set aside in Retirement Accounts will be raised gradually to reach $120,000 in 2013.
The increase, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement.
The changes to the requirements are in tandem with the previously announced national annuities programme, CPF Life, which gives participants an income every month - for life. Set to start in 2013, CPF Life will be compulsory for those with a minimum sum balance of at least $40,000 at age 55. Those with less can opt in.
Yesterday’s CPF Board statement also said that the Medisave Minimum Sum requirement will also be raised to $29,500 from July 1. It is currently $28,500.
The CPF Board said that members will have to set aside the new amount, or the actual Medisave balance - whichever is lower - when they withdraw their CPF savings at or after they turn 55.
The Medisave Contribution Ceiling also goes up to $34,500 from July 1. This is the maximum amount each member can have in his Medisave account.
Any amount above this ceiling will be transferred to the member’s Special Account if he is below 55, or to the Retirement Account if he is above 55. The current ceiling is $33,500.
These revisions, said the CPF Board, are to ensure that Singaporeans have enough savings for hospitalisation costs.
Another change is to the withdrawal rule when a member turns 55.
Now, members whose CPF balances are lower than the Minimum Sum at age 55 are allowed to withdraw $5,000 or 50 per cent of their savings - whichever is higher.
But from Jan 1 next year, the percentage of withdrawal will decrease from 50 per cent to 40 per cent. It will be reduced every year by 10 percentage points.
By 2013, members must meet the CPF and Medisave Minimum Sums first before they can withdraw their remaining balances from their Ordinary and Special Accounts at age 55.
But they can continue to withdraw the first $5,000 from these accounts if they do not have the full Minimum Sum amount.
The changes in withdrawal rules are aimed at helping members set aside more savings for their retirement, the board explained.
Source : Straits Times - 17 Jun 2008
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