by Vincent Low
A recent update on CPF website shows that the new Minimum Sum (now called "Full Requirement Sum") is set at $181,000 for those who turned 55 in the year 2020.
According to Ministry of Manpower (MOM) website, it said that the CPF is a "key pillar of Singapore's comprehensive social security system".
It further explained why the Minimum Sum needs to be increased successively:
"For each successive cohort of members turning 55, the payouts need to be higher to account for long-term inflation and rising standard of living."
MOM did not specify any figure for this long-term inflation rate on its webpage but according to Trading Economics, which provides and calculates economic data for 196 countries based on official sources, Singapore's core inflation rate averaged 2.63 percent from 1962 until 2017.
In fact, if we look at the increase of Minimum Sum and the inflation rates in the last decade or so, we find little correlation between the two. In some years when we experienced negative inflation, the Minimum Sum actually continued to be increased.
And for 2017 to 2020, the Minimum Sum increase has been mysteriously decided to be a fixed $5,000, resulting in Minimum Sum figures of $166,000 to $181,000.
Perhaps the government really wants to raise our "standard of living" by increasing the Minimum Sum so that we could have a higher monthly payouts when we hit 65. Only this can explain the discrepancies between the Minimum Sum increase and inflation rates.
What do you think?