New CPF minimum sum at $106,000
THE Central Provident Fund Board yesterday said that the new minimum sum would be $106,000. The latest amount will apply to CPF members who turn 55 between July 1, 2008 and June 30, 2009.
‘Members who set aside the $106,000 cash savings in their retirement account will receive a monthly payout of $910 from age 64 for about 20 years,’ the board said.
The announcement follows the government’s plan in 2003 to raise the CPF minimum sum to $120,000 by 2013, through an annual increase of $4,000 from 2004. The $120,000 figure did not include inflation over the past five years.
The new increase in the minimum sum requirement was to ensure that Singaporeans will have more savings to tide them over retirement, as people were expected to live longer.
The minimum sum was adjusted to $106,000 from the $100,000 based on 2003 dollars.
This was calculated from the consumer price index published by the Department of Statistics, of 0.5 per cent, 1.7 per cent, 0.5 per cent, one per cent and 2.1 per cent respectively for the years 2003 to 2007.
The CPF board has also raised the lower and upper limits for members’ Medisave accounts by $1,000.
This means that from July, members must set aside at least $29,500 in their Medisave accounts when they withdraw their CPF at or after the age of 55.
Their contributions must also be capped at $34,500. Excess funds will be channelled to the Special Account if the contributor is below 55 or to the Retirement account if the person is over 55 and the latter account has less than $106,000.
The interest rate for the Special, Medisave and Retirement accounts will continue to be pegged to the 12-month average yield of the 10-year Singapore Government Security, plus one per cent. The rate stands at 3.65 per cent for the period June 1, 2007 to May 31, 2008.
The government has said that it will maintain a floor rate of 4 per cent for two years if the pegged rate falls below 4 per cent. It will apply a 2.5 per cent rate for all CPF accounts after two years.
Source : Business Times - 17 Jun 2008
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