The Central Provident Fund (CPF) is like a piggy bank set up by the Singapore Government. It ensures people have enough money when they retire, especially because things are getting more expensive. The government plans to change this fund by 2025 to ensure everyone’s future is secure.
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CPF Retirement Sum in Singapore
The government plans to help older people who don’t have much money by increasing the amount they get every month when they retire. The Retirement Sum is like a savings goal that shows how much a person needs to save to get the monthly payments they want. There are three goals a person can aim for: Basic Retirement Sum, Full Retirement Sum, and Enhanced Retirement Sum.
Basic Retirement Sum (BRS)
The BRS is a monthly payment that covers basic needs. When a person turns 55, the money in their Retirement Account is limited to $102,900. Once they turn 65, they will start getting monthly payments between $840 and $900. The BRS will slowly increase until 2027. Here’s what it will look like:
- By 2025: S$106,500
- By 2026: S$110,200
- By 2027: S$114,100
Full Retirement Sum (FRS)
The FRS is a bigger amount considering future costs like housing and other expenses. When a person turns 55, the money in their Retirement Account is limited to S$205,800. Once they turn 65, they will start getting monthly payments between S$1,560 and S$1,670. The FRS will also slowly increase until 2027. Here’s what it will look like:
- By 2025: S$213,000
- By 2026: S$220,400
- By 2027: S$228,200
Enhanced Retirement Sum (ERS)
The ERS is the biggest monthly payment a person can get. It’s for people who want more money when they retire. The ERS will also slowly increase until 2027. Here’s what it will look like:
- By 2025: S$319,500
- By 2026: S$330,600
- By 2027: S$342,300
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Changes to CPF Retirement Sum
The CPF Retirement Sum gives financial help to older people based on how much they save every month. Recently, the government decided to increase the maximum amount of ERS starting from January 2025. Here’s a simple table that shows the changes:
Year |
BRS |
ERS Before Changes |
Monthly Estimated Payouts |
ERS from 1 Jan 2025 |
Monthly Estimated Payouts |
|---|---|---|---|---|---|
2025 |
$106,500 |
$319,400 |
$2,530 |
$426,000 |
$3,300 |
2026 |
$110,200 |
$330,600 |
$2,610 |
$440,800 |
$3,440 |
2027 |
$114,100 |
$342,300 |
$2,690 |
$456,400 |
$3,550 |
These estimated monthly payouts are based on a man who starts saving at 55 and getting payments at 65 under the CPF Life Standard Plan.
Who Can Get CPF Retirement Sum?
Here are the rules for who can get the CPF Retirement Sum:
- People born before 1958 are Singapore citizens and are not part of CPF Life.
- People under 70 can choose to get payments later.
- People who are not permanent residents of Singapore or not citizens of Singapore must be at least 65 years old.
Also, people can keep getting monthly payments until they use up all their savings or until they turn 90. The Retirement Account balances earn an interest rate of up to 6% annually.
In Conclusion
The Singapore Government helps people save money for retirement. When a person turns 55, their CPF savings are moved to the FRS, which creates a Retirement Account (RA). First, the special account savings are moved, and then the ordinary account savings.
Starting in 2025, the special account will be closed for people aged 55 or older. The government believes that retirement savings should earn long-term interest rates, while money that can be taken out at any time should earn short-term interest rates.
If a person has savings in the special account and it gets closed, they will be moved to the Retirement Account, up to the Full Retirement Sum for higher retirement payouts. Once the Full Retirement Sum is set, the remaining savings are moved to the ordinary account and can be taken out any time.
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Mahesh Sen, a seasoned student advisor, writes informative articles on educational topics. Mahesh gives valuable insights and practical advice to guide students through their academic challenges and milestones.