On 1 July 2015, the Central Provident Fund (CPF) Minimum Sum requirement rose from $155,000 to $161,000.
The increase was first announced by Prime Minister Lee Hsien Loong in his National Day Rally speech last year.
The Minimum Sum is the amount that must be set aside in a member’s CPF savings account for retirement when a member turns 55.
Half of the savings can be in the form of a pledge from a property purchased with CPF savings.
Members receive monthly payouts in their retirement years.
This latest hike in the Minimum Sum is the “final installment”, PM Lee said in August 2014, in a long list of increases since 2003 when the Minimum Sum was set at $80,000.
He said then that he did not see any more major increases in the Minimum Sum, but added a caveat: that there would still be a need to adjust it “from time to time” as lifespans, incomes and basic spending go up.
The Government has also introduced a slew of changes to the scheme, after thousands turned up at Hong Lim Park in 2013 to protest against the scheme which they saw as the government’s unfair locking up of their savings.
Among the changes introduced, which included the change in name from “Minimum Sum” to “Retirement Sum”, members can now choose from three plans with different payout models upon retirement.
According to the Sunday Times:
One is to opt for the Basic Retirement Sum of $80,500, which would give monthly payouts of $650 to $700.
A person with the Basic Retirement Sum at age 55 would be able to see it grow to about $126,500 by the time they turn 65.
The second option is to keep it at the Full Retirement Sum of $161,000 for monthly payouts of $1,200 to $1,300. The Full Retirement Sum will grow to some $245,500 over 10 years.
Third, you can choose the Enhanced Retirement Sum of $241,500 for monthly payouts of $1,750 to $1,900. The Enhanced Retirement Sum will grow to around $364,500 over 10 years.
A lump sum withdrawal of up to 20 per cent of your retirement savings will also be allowed when you reach 65.
To understand the changes further, please read also: “What Exactly is the Big Deal About the New CPF Minimum Sum?” by Money Smart.