Retirement Benefits under the Central Provident Fund in Singapore

1. Bro. John De Payva, SMMWU/Singapore Retirement Benefits under the Central Provident Fund in Singapore

2. Supporting and caring for a rapidly aging population will be an increasing strain on Singapore's younger generations. Today, 8.5 economically active persons are supporting one elderly. By 2030, only 3.5 persons will be supporting one elderly! Therefore, it is important that we plan early for a secure retirement.

3. The Central Provident Fund (CPF) is a comprehensive social security savings plan that has provided many working Singaporeans with a sense of security and confidence in their old age. The overall scope and benefits of the CPF encompass the following:- Retirement Healthcare Home Ownership Family Protection Asset Enhancement The social security savings plan

4. Working Singaporeans and their employers make monthly contributions to the CPF and these contributions go into three accounts:- Ordinary Account - the savings can be used to buy a home, pay for CPF insurance, investment and education. Special Account - for old age and investment in retirement-related financial products. Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance. Monthly cpf contributions

5. The Ordinary Wage Ceiling is S$5,000. This means that only the first S$5,000 earned by PMEs will be subjected to CPF contribution. Cpf contribution & allocation rates Rates from 1 September 2012

6. The CPF savings earn a minimum risk-free interest of 2.5% guaranteed by the Singapore Government. Special, Medisave and Retirement Account savings currently earn a guaranteed minimum 4% interest until 31 December 2012. In addition, the first S$60,000 in the combined CPF balances, with up to S$20,000 from the Ordinary Account, will earn an extra 1% interest. Interests earned on the cpf savings

7. CPF is primarily for retirement. We can withdraw our CPF savings when we turn 55, after meeting the CPF Minimum Sum (MS) requirements under the MS Scheme. The CPF MS is set at S$139,000 from 1st July 2012 and will be raised gradually until it reaches S$120,000 (in 2003 dollars) in 2015. (i) Retirement savings & withdrawals

8. The CPF MS can be used to buy a life annuity from a participating insurance company or left in the Retirement Account (RA) with the CPF Board. If a life annuity is bought, we will receive the monthly income for life. If the MS is left with the CPF Board, we will receive the monthly income until the RA balance is exhausted. The latest option is to participate in the CPF LIFE where we can enjoy a monthly income for life. From 1 January 2013, CPF members with at least S$40,000 in their Retirement Account at age 55 or with at least S$60,000 at age 65 will be placed on CPF LIFE. (i) Retirement savings & withdrawals

9. Medisave savings can be used to pay for own or dependant(s)' hospitalisation expenses. It can also be used for certain outpatient treatments like chemotherapy and radiotherapy treatments. Medisave savings can also be used to pay the premiums for MediShield or private medical insurance plans under the Private Medical Insurance Scheme (PMIS). (ii) Meeting healthcare needs

10. For older CPF members, Medisave savings can also be used to pay the premium for ElderShield, a severe disability insurance scheme that provides insurance coverage to those who require long-term care. To ensure that all Singaporeans have access to medical care, Medifund is available to help the poor and needy with their medical bills. (ii) Meeting healthcare needs

11. Ordinary Account savings can be used to buy a home under the CPF housing schemes. We can buy an Housing Development Board (HDB) flat under the Public Housing Scheme, or a private property under the Private Properties Scheme. The CPF savings can be used for full or part payment of the property, and to service the monthly housing payments. (iii) Home ownership

12. The Dependants' Protection Scheme helps our family to tide over the first few years in the event of an insured member's permanent incapacity or death. The Home Protection Scheme protects us and our family from losing our home. This scheme is applicable to all CPF members who use their CPF savings to buy an HDB flat. Should the insured member become permanently incapacitated or die, the CPF Board will pay the outstanding housing loan based on the amount insured. MediShield ElderShield (iv) Family protection

13. To enhance the retirement savings, CPF members may invest their Ordinary Account balance under the CPF Investment Scheme - Ordinary Account (CPFIS-OA) and their Special Account balance under the CPF Investment Scheme - Special Account (CPFIS-SA). (v) Asset enhancement

14. The Straits Times Jul 7, 2012 (By Melissa Tan) Pool of CPF members has grown older: Study But rise in number of active members bodes well for retirement adequacy June 2012 cpf trends study • Those making up the pool of Central Provident Fund (CPF) members have grown older, on average, but the number of active members has grown larger. • The proportion of active CPF members who are 45 years old and above grew from 28.9 per cent in 2001 to 39.9 per cent last year, the study found. • At the same time, the percentage of active members below 45 years of age fell from 71.1 per cent in 2001 to 60 per cent last year. • The number of active CPF members rose from 1.7 million in 2010 to 1.74 million last year.

15. June 2012 cpf trends study • The study findings reflected there was 'an increasingly urgent need to enhance the adequacy of CPF savings to help members be financially secure in their old age'. • CPF members were encouraged to make use of voluntary contribution schemes such as the Minimum Sum Topping-Up scheme. This programme lets Singaporeans voluntarily top up CPF accounts of ageing parents or other family members, especially those not working or unable to work. • People are working longer, which means they may not have enough for retirement.

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