New retirement savings package announced by PM Lee for older Singaporeans

SINGAPORE: Prime Minister Lee Hsien Loong unveiled the Majulah Package on Sunday during his National Day Rally (20 Aug), a new initiative aimed at bolstering retirement savings for lower and middle income Singaporeans aged 50 and above.

The package includes:

  • Yearly CPF Bonus: Those who remain employed will receive an annual CPF bonus of up to S$1,000.
  • One-time CPF Bonus: A sum of S$1,500 will be granted to those who have yet to meet the CPF Basic Retirement Sum (BRS).
  • One-time MediSave Bonus: Individuals who are 50 and above this year will benefit from a $1,000 bonus.

This initiative is primarily designed for Singaporeans born in 1973 or earlier. With an estimated cost of S$7 billion to the government, it is expected to especially benefit those with lower incomes and fewer assets.

Approximately 1.4 million older Singaporeans, translating to over eight in every ten Singapore citizens aged 50 and above in 2023, are projected to gain from this package.

A means test that factors in income, residential annual value, number of properties owned, and CPF savings will be applied. Specific eligibility details are set to be disclosed in 2024.

This package is also tailored to support the Pioneer and Merdeka Generations, resonating with the broader objective of urging older Singaporeans to extend their working years.

Addressing the segment termed as “young seniors”, which includes those born between 1950 and 1959 and in 1949 or earlier, PM Lee noted that while this group generally fared better than the Pioneer and Merdeka Generations due to Singapore’s growth, they earned less than the younger workforce. This demographic also has less time to capitalize on the CPF system enhancements and accumulate adequate retirement savings.

The Majulah Package, according to PM Lee, aims to ease concerns surrounding retirement, especially as this age group juggles the dual responsibilities of looking after younger and older family members.

The package’s primary component, the Earn and Save Bonus, offers a yearly CPF bonus ranging between $400 and $1,000 to lower- and middle-income workers, contingent on their continued employment. This bonus, in addition to the regular contributions from both the employer and employee, will be credited to the recipient’s CPF account.

Underlining the importance of continued employment for “young seniors,” PM Lee cited an example of a 55-year-old with lower income. If this individual chooses to retire at 65, the Earn and Save Bonus would result in an additional CPF savings of S$12,000 over a decade, inclusive of interest.

To further fortify retirement preparations, the Retirement Savings Bonus (RSB) will be introduced for those who have not reached the CPF BRS, offering a one-time bonus of between S$1,000 and S$1,500.

The RSB also extends its reach to non-working individuals, including housewives with low CPF balances.

Amidst rising healthcare expenses, the MediSave Bonus, which involves a one-time top-up ranging from S$500 to S$1,000, was introduced as part of the Majulah Package to provide relief for medical bills and insurance premiums.

PM Lee also mentioned that improvements to existing schemes, like Silver Support, Workfare, and the Matched Retirement Savings Scheme, are in the pipeline. Comprehensive details of these enhancements are anticipated in 2024.

Ensuring a sustainable financial approach, a new fund will be established by the Ministry of Finance, using resources from the current term of government, to cater to the Majulah Package’s lifetime costs. PM Lee emphasized that this strategy is designed to prevent imposing financial strains on upcoming generations.

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