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Singaporeans turning 55 between July 1 this year and June 30 next year are required to set aside more retirement savings under the Central Provident Fund (CPF) to reach a new minimum sum.
This minimum sum will be raised to $155,000 and the amount will be set aside in the Retirement Account, using savings from the Special Account and then the Ordinary Accounts. The minimum sum for those who turn 55 before July 1 this year remains unchanged.
According to a statement released by the Ministry of Manpower (MOM) these changes to the CPF minimum sum, Medisave minimum sum and Medisave Contribution Ceiling are being put in place “to better meet Singaporeans’ expectations of basic standard of living in retirement”.
“The Minimum Sum provides CPF members with monthly payouts from the Draw-Down Age (DDA), the statement read. “Setting aside more retirement savings means higher payouts when members retire.”
As an example, under the CPF LIFE Standard Plan, setting aside the full minimum sum of $155,000 at age 55 provides a lifelong payout of about $1,200 per month, while $75,000 will provide about $620 per month.
For Medisave sums, from July 1 this year, the minimum sum will be raised to $43,500 – up from $40,500 – meaning a member will need to have this amount in their Medisave account and also meet the CPF minimum sum before excess funds can be withdrawn.
“With Singaporeans living longer and the availability of better quality of medical treatment, Singaporeans will need to save more in their Medisave Accounts to help pay for their healthcare expenses.
“In addition, as Medisave is opened up to more uses, regular Medisave Minimum Sum adjustments are necessary to help Singaporeans better prepare for their long-term healthcare needs.”
The Medisave Contribution Ceiling will also be increased correspondingly to $48,500, from $45,500. This is the maximum balance a member can have in his Medisave Account.
For more information on this, go to the MOM website.