As a part of the Government’s effort to support the retirement for seniors, a new scheme is introduced to help those lower-to-middle-income Singaporeans aged 55 to 70 who have not been able to set aside the prevailing Basic Retirement Sum (BRS) to save more in their CPF accounts.
The new scheme, named “Matched Retirement Savings Scheme” was announced by Finance Minister, Heng Swee Keat in his budget speech on Tuesday (18 February) as budget measures and retirement supports for the seniors.
Under this scheme, the government will match every dollar of cash top-up made to the CPF Retirement Account, up to an annual cap of $600, from 2021 to 2025.
Noting the new scheme will be eligible for about 435,000 Singaporeans, Finance Minister said that this scheme is to encourage and augment family support for the seniors with fewer means in retirement.
Speaking on the CPF, Mr Heng also mentioned that it is a good retirement scheme based on personal savings where many Singaporeans wanted to top up their own, their spouse’s or parents’ CPF accounts.
“In 2019, such voluntary cash top-ups added up to about $1 billion. We would like to encourage more to do so, particularly those whose CPF balances are on the low side,” Mr Heng added.
Hence, government will enhance the Silver Support Scheme to complement the CPF of the lower-income seniors during their retirements.
It was noted that the scheme currently provides cash payouts to the bottom 20% of Singaporeans aged 65 and above, with some support for those slightly above that.
Mr Heng said that the quarterly cash payouts in the scheme will increase by 20%, which is from $750 to $ 900 per quarter for those individuals who live in smaller flats.
Meanwhile, the threshold of the scheme’s eligibility criteria will also expand for lifetime wages and per capita household income to cover more seniors
Mr Heng said, “There will be a new payout tier to provide a smaller payout to seniors whose monthly household incomes per person are above S$1,300 but not exceeding S$1,800 where these seniors do not receive Silver Support today.
He also added that the eligible seniors no need to apply for this scheme as they will be informed by CPF Board and start receiving payouts under the enhanced scheme from December this year.
Giving a summarise about the Silver Support Scheme, Mr Heng said that about 100,00 more seniors are expected to benefit from the enhanced scheme in 2021, while adding that the cost will nearly double, from today’s $330 million, to around S$620 million in 2021.
“These enhancements underscore the Government’s commitment to provide seniors with greater assurance in retirement, and reflect the values we hold dear, such as taking care of our parents and seniors,” he added.
With the increase of income levels, the government will also adjust the BRS by the same 3% per year for the next two year in order for the payouts to keep up with basic retirement expenses.
“Since 2017, the household incomes per capita have risen by an average of 4.1% per year in nominal terms, while the BRS has increased by 3 per cent per year,” said Mr Heng.
In view of this, Mr Heng said that for cohorts turning 55 in 2021, the BRS will be $93,000 while for cohorts turning 55 in 2022, the BRS is $96,000.
Mr Heng also pointed out that each successive cohort has been able to save more with the continuing wage growth.
“We expects seven in ten actively employed persons from these two cohorts to be able to set aside their BRS, “significantly” more than the four in ten about a decade ago,” added Mr Heng.