SINGAPOREANS who turn 55 between July 1 this year and June 30 next year will have to set aside more retirement savings in their Central Provident Fund (CPF), under changes announced yesterday.
The Minimum Sum will be raised to $155,000, up from $148,000 for those who turn 55 between July 1 last year and June 30 this year.
The Minimum Sum for CPF members who turn 55 before July 1 this year remains unchanged.
“In order to maintain its real value over time, the Minimum Sum increases to account for inflation,” the CPF Board and Ministry of Manpower (MOM) said in a joint statement yesterday.
The government agencies added that the CPF Minimum Sum has been increasing for each cohort of members turning 55 yearly, so that the target of $120,000 in 2003 dollar terms can be reached by next year.
They said this is “to cater to Singaporeans’ rising expectations of what is considered a basic standard of living in retirement”.
A CPF spokesman told The Straits Times that the $155,000 Minimum Sum is equivalent to $117,500 in 2003 dollar terms.
The Minimum Sum provides CPF members with monthly payouts once they hit their draw- down age.
A check on the CPF website on the Minimum Sum increases over the years shows that the latest hike of 4.7 per cent is the lowest in current dollar percentage terms since 2003.
Mr Vincent Tey, executive director of financial advisory firm Providend, said this could likely be due to the lower inflation last year. “Inflation is a fact of life, and this Minimum Sum increase is a necessary and good thing in my opinion because one of the major risks for retirees is overspending if you don’t lock up your money.”
Last year’s consumer price index came in at 2.4 per cent, down from the previous year’s 4.6 per cent.
The CPF Board and MOM also announced that from July 1, the Medisave Minimum Sum will be raised to $43,500 from $40,500.
The Medisave Minimum Sum is the amount that a CPF member needs to set aside in his Medisave account for his own and his dependants’ health-care expenses.
A CPF member will need to have this amount in his Medisave account and also meet the CPF Minimum Sum before excess funds can be withdrawn.
The Medisave contribution ceiling will also be increased correspondingly to $48,500 from $45,500. This is the maximum balance that a member can have in his Medisave account.
Property agent Nicholas Chang, 23, said the increased Minimum Sum is reasonable.
“Prices of everything increase so it’s natural that the Minimum Sum amount in CPF has to go up to help you to have enough monthly payout when you retire,” he said.
But hairstylist Jonathan Yeo, 22, disagreed.
“With so much set aside in CPF, I don’t know if I have enough for myself or can live long enough to enjoy it,” he said.
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.
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