Here are six new changes to the CPF policies that you should know about so you can manage your CPF funds wisely (and hopefully hit the retirement sum ASAP).
When it comes to CPF policies, chances are you won’t know anything about it unless you reach a specific age (ahem) or start to contribute to your parents’ MediSave accounts.
But with the recent changes announced on 1 November 2021 by the Ministry of Manpower (MOM) as part of the CPF (Amendment) Bill 2021, maybe it’s time to keep your ears peeled so you won’t be left in the dark.
Aside from the ground-breaking (or not) change in the retirement age from 67 to 70 by 2030, here are some other things that you should take note of, to prove to your peers that you are CPF-savvy.
#1 Automatic continuation of retirement payouts from OA and SA
Before: Currently, individuals under the Retirement Sum Scheme (RSS) will only continue receiving retirement payouts after their Retirement (RA) account is depleted when they opt to transfer your funds from their Ordinary Account (OA) and Special Account (SA) to their RA.
After: You will automatically receive payouts from both your OA and SA without having to apply for it after your RA funds are used up, making it extremely hassle-free.
Implementation date: First quarter of 2022
#2 Quicker and easier disbursement of CPF money after a member dies
Before: When a family member passes on, the monies will be transferred to the Public Trustee’s Office (PTO) for disbursement according to intestacy laws after verifying the beneficiary’s claim, for un-nominated CPF funds. When it comes to nominated CPF monies, they are disbursed automatically by the CPF Board to the eligible nominees and will take seven years to take effect due to the time needed for the liquidation of the Singtel Discounted Shares that the deceased might be holding.
After: As with the new changes, any amount less than S$10,000 for un-nominated CPF monies will be streamlined. This allows a single beneficiary to represent all other beneficiaries (of course with consent) to receive it on their behalf. The process for amounts above S$10,000 will be unchanged.
On top of that, nominated CPF monies will be automatically disbursed to nominees with bequeathed discounted Singtel shares that are purchased under the Special Discounted Shares scheme. The shares will be liquidated after six weeks if no instructions are given to CPF board, and will be disbursed to the beneficiaries along with the CPF monies.
Implementation date: 1 April 2022
#3 Automatic increase of CPF LIFE payouts upon contribution to Retirement Account
Before: As soon as you turn 65 years old, the funds from your RA will be the funds distributed to you in the form of CPF LIFE payouts. Any top-ups to your RA or incoming cash flow like housing refunds will be additional monthly retirement payouts, separate from the CPF LIFE scheme unless they have applied to increase their CPF LIFE premiums with those inflows.
After: Any cash flow into your RA will automatically be part of your CPF LIFE payouts. This means that your monthly CPF LIFE payout will increase accordingly with the additional sum that you have contributed, without having you go through the trouble of applying for it.
Implementation date: 1 November 2021
#4 Contributor of MediSave top-ups will now receive tax reliefs
Before: As we all know, family members who contribute to their loved one’s MediSave will reap tax relief benefits, though the tax reliefs will go to the recipient of the top-ups. Do note that this is not to be confused with the Retirement Sum Topping Up Scheme (RSTU) where tax reliefs go to the contributor.
After: With the new changes, if you contribute to someone’s MediSave account, the tax relief will apply to you, as it should, since it makes more sense for you to benefit from it if you’re the one contributing to your parents’ or child’s MediSave accounts.
Implementation date: 1 January 2022
#5 Increase in tax relief top-ups for self and loved ones
Before: If you’re making any top-ups through the RSTU to either your own CPF account or to your loved ones’ account, you as the contributor can receive up to S$7,000 in tax relief.
After: With the new implementation starting 1 Jan 2022, you can now receive up to S$8,000 in tax relief for self top-ups and a separate S$8,000 for contributing to others’ accounts, you can enjoy when you make voluntary contributions to your Special, Retirement or MediSave accounts only.
Implementation date: 1 January 2022
#6 Simplified annual limits for MediSave top-ups
Before: If you’ve contributed to someone else’s MediSave account before, you would know how complicated it was to calculate just how much you can top-up, as it required a system of calculating the difference between the CPF annual limit (S$37,740 in 2021) and the Basic Healthcare Sum (S$63,000 if you turn 65 in 2021).
After: As of now, it is much simpler to calculate: The maximum amount that you can pump in is basically the difference between your Basic Healthcare Sum (BHS) and your MediSave balance.
Implementation date: 1 January 2022
CPF policy changes
We know it’s a lot to take in, and it may be confusing at times. If you need further assistance, feel free to reach out to CPF Board here to answer your queries!
Read these next:
A Complete Guide To CPF In Singapore (2021)
CPF Special Account (SA) Shielding: A Hack To Retire Better
Pros & Cons of Keeping Your Savings In CPF Special Account
4 Reasons Why You Should Voluntarily Contribute To Your Children's CPF
How Much Does A Self-Employed Person Need To Contribute?
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