Here’s how eligible Singaporeans can claim $600 in retirement savings from the Government.
Are you or do you know someone aged between 55 and 70, with less than $93,000 in your Central Provident Fund (CPF) Retirement Account?
There’s a good chance you said yes, because according to estimates, about 440,000 Singaporeans fall into this category.
If so, you can look forward to a helping hand from the Government to boost your retirement savings by an extra $600 this year.
5-year scheme to help those with less CPF savings save more
Announced during Budget 2020, the CPF Matched Retirement Savings Scheme (MRSS) is a newly launched initiative that seeks to increase the retirement accounts of those with insufficient balances.
This is benchmarked against the prevailing Basic Retirement Sum, which currently stands at $93,000. CPF estimates that about 53% of members 55 to 70 fall into this category.
The scheme works as a matched contribution from the government up to $600 per year, which means eligible accounts could see their retirement savings grow by a total of $1,200 ($600 from self contributions, $600 from the government).
The CPF MRSS will last from 2021 to 2025, as previously announced, benefitting about 440,000 lower and middle income Singaporeans throughout the period.
What is the eligibility criteria for CPF Matched Retirement Savings Scheme?
To be eligible for the CPF MRSS, you’ll need to fulfil the following criteria:
- CPF member aged 55 to 70
- With less than $93,000 balance in Retirement Account (prevailing Basic Retirement Sum)
- Average income of less than $4,000 per month
- Annual value of residence up to $13,000 (all HDB flats are covered)
- Must not own more than one property
How can I receive matched contributions, and how much?
You may receive matched contributions by making a cash top-up to the account of an eligible CPF member. Any cash top-ups made will be matched dollar-for-dollar by the Government.
The matching contribution will be capped at $600 per account this year. However, there is no limit on voluntary top-ups.
Who can make the cash top-ups?
Anyone can make the cash top-ups: family members, relatives, friends and employers may do so on a voluntary basis.
Do I need to make a lump-sum top-up to get the matched contributions?
You can choose to make a lump-sum top-up, monthly cash contributions, or periodic top-ups. Every eligible cash top-up will be matched by the Government, up to a cap of $600 per member this year.
How can I make the cash top-ups?
Top-ups to eligible accounts can be performed via the CPF website or the MyCPF mobile app.
How do I check my/loved ones’ eligibility?
All eligible Singaporeans will receive a notification letter later this month. You can also login to your CPF online account to check your eligibility.
3 reasons why eligible Singaporeans should take part in CPF MRSS
#1: Free money to support self-sufficiency
The CPF MRSS is designed to help Singaporeans achieve self-sufficiency. It is also, literally, free money, given with no strings attached. So why say no to that?
#2: A little goes a long way
Your top-up can go a long way, way longer than you think.
While you may look upon it as a simple cash gift, when placed into CPF Life, your $600 multiplies thanks to the power of compounding interest. After all, funds in the CPF Retirement Account attract up to 6% interest per annum.
Assuming the annual cap is reached every year, the total contribution over five years will reach $6,000 per account ($3,000 from top-ups, $3,000 matched). With the interest factored in, this can grow to as much as $8,300 by age 65, increasing CPF LIFE payouts by up to $45 a month.
#3: The big picture
Your top-ups will not only directly help your loved ones, they also help support the CPF LIFE scheme on the whole.
At its core, CPF Life is an annuity scheme, and like all annuities, depends on the pooled resources of all members to keep it running.
This means that every dollar that goes into the pool raises the scheme’s overall potential to reap returns to fund the scheme. The higher the returns, the more funds there is for everyone in the scheme.
In other words, the richer the scheme, the better off every member will be.
As a Singaporean, you are entitled to join CPF LIFE and will one day start benefiting from monthly payouts for life. In essence, you are also helping your future self.
If anything, this is an opportunity to take part in a virtuous cycle – from as low as $50 per month!
Read these next:
Pros And Cons Of Keeping Your Savings In Your CPF Special Account
Uniquely Singaporean Things We Do To Accumulate Wealth
CPF Investment Scheme (CPFIS): Guide To Investing With Your CPF
How Much Do You Really Need For Your Dream Retirement Lifestyle?
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By Alevin Chan
An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.