Parliament
SG Budget 2024: CPF’s Enhanced Retirement Sum up, Special Account closure for 55+
DPM Wong on Friday unveiled CPF reforms: 1.5% contribution rate hike for 55-65 age group, 2025 sees Govt raising max CPF Retirement Account deposits for higher payouts, and CPF Special Account closure for those aged 55+.
SINGAPORE: Deputy Prime Minister and Finance Minister Lawrence Wong announced significant changes to the CPF system in his Budget 2024 speech in Parliament on Friday (16 Feb).
Starting from 1 Jan 2025, the Government will increase the maximum amount that members can contribute to their CPF Retirement Accounts to qualify for CPF payouts.
In particular, the Enhanced Retirement Sum (ERS), the maximum amount for CPF members to accumulate interest and receive payouts, will now be pegged to four times the Basic Retirement Sum (BRS), up from the current three times.
Minister Lawrence Wong stated that this adjustment will raise the ERS to S$426,000 in 2025, compared to the previous amount of S$319,500.
This change aims to enable more members aged 55 and above to commit their accumulated CPF savings for higher monthly payouts, supporting their retirement needs.
The BRS itself provides CPF members with monthly payouts to cover basic living expenses during retirement.
These modifications to the CPF system are part of broader reforms introduced by DPM Wong.
Additionally, effective 1 Jan 2025, there will be enhanced retirement support for seniors through the Matched Retirement Savings Scheme (MRSS) and the Silver Support Scheme.
The MRSS, previously applicable to Singaporeans aged 55 to 70 who did not meet their BRS, will now be extended to those above the age of 70.
“I will extend the MRSS to those above the age of 70. This will enable more Singaporeans to meet their retirement needs, with help from their families, employers, and the community,” Mr Wong said.
Furthermore, the cap on the annual amount matched under MRSS will increase to S$2,000, up from the current S$600.
However, the total grant provided to an eligible member will be capped at S$20,000 over their lifetime.
Notably, cash top-ups eligible for the matching grant will no longer qualify for tax relief.
DPM Wong emphasized that the matching grant itself is a substantial benefit provided by the Government.
As of now, Singaporeans aged 55 and above receive tax relief on cash top-ups of up to S$8,000 made to their Retirement Account.
The anticipated changes to the CPF system are extensive and aim to benefit a larger portion of the population.
The number of CPF members eligible for the Matched Retirement Savings Scheme (MRSS) is projected to increase significantly, from 395,000 in 2024 to approximately 800,000 in 2025.
Simultaneously, adjustments are being made to the Silver Support Scheme. The per capita household income threshold for eligibility will be raised from S$1,800 to S$2,300.
Additionally, the threshold for increased support under the tiered scheme, designed for seniors with lower incomes and limited family support during their working years, will be raised from S$1,300 to S$1,500.
Quarterly payments under the scheme will be increased by 20% across all tiers to keep up with inflation.
The revamped Silver Support Scheme is expected to benefit around 290,000 Singaporeans aged 65 and above, according to the Ministry of Finance (MOF).
CPF Special Account closure for individuals aged 55 and above
To streamline the CPF system, Mr Wong announced the closure of the Special Account (SA) for members aged 55 and above, starting in early 2025.
Hence, CPF members will maintain three CPF accounts: the Retirement Account (RA), housing savings intended for retirement payouts; the Ordinary Account (OA), and the Medisave Account (MA).
SA savings will be transferred to the RA up to the Full Retirement Sum, continuing to attract the same long-term interest rate.
Remaining SA savings will be transferred to the OA, with the option for members to voluntarily move OA savings to the RA for higher interest and greater retirement payouts.
Alternatively, members may choose to retain savings in the OA, where they remain withdrawable and earn the short-term interest rate.
The long-term interest rate, applicable to SA, RA, and MA, is currently set at a minimum of 4%, while the short-term interest rate for the OA is at a 2.5% minimum.
1.5 percentage point CPF contribution rate increase for individuals aged 55 to 65
Moreover, there will be an increase of 1.5 percentage points in CPF contribution rates from both senior workers aged above 55 and up to 65 and their employers, effective Jan 1, 2025.
This marks the latest step in a series of contribution rate increases recommended by the Tripartite Workgroup on Older Workers in 2019, set to continue through approximately 2030.
In a move to ease the impact on businesses, Minister Wong announced the extension of the CPF Transition Offset to employers for an additional year. This extension will cover half of the increase in employer contributions for 2025.
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The CPF Investment Scheme (CPFIS) lets you invest your Ordinary Account (OA) and Special Account (SA) savings to increase your retirement
Why close SA ?
“….In particular, the Enhanced Retirement Sum (ERS), the maximum amount for CPF members to accumulate interest and receive payouts, will now be pegged to four times the Basic Retirement Sum (BRS), up from the current three times.…” —————- CPF Life was the creation of Ah Loong. For those unfamiliar, the previous Minimum Sum has now being re-gloried into 3 “Retirement Sum” – BRS, FRS and ERS. I have always questioned the sustainability of CPF Life; now LawlanWong hasn’t taken over from Loong, already announces CPF members can (which stop of MUST) top up the INCREASED RS using own savings. Does… Read more »
System For the People YET the people have no say in the system. Always being dictated by the Elite Politicians. So dun tell me it is to serve the people or tell them for Future Generations. It is all lies!!!!
Offshore Account Right!!! Where got hold ppl CPF hostage oso and ppl cannot decide themselves. They are just ROGUE politicians backed by either USA or China top Elites. Herd immunity they say!!!!