CPF Proposals Simplified…

The CPF Advisory Panel released its recommendations to the Government today. The Government issued a statement, accepting the recommendations by the Panel within the same day.

cpf building

Here’s a run down of what Singaporeans can look forward to.

  1. No more Minimum Sum

Yes, you read it right! No more minimum sum. But, the sum will be sub-divided in three: Basic Sum, Full Sum, and the Enhanced Sum.

The Basic Sum is the Basic Payout (a payout of $650 to $700 per month to a member who retires in 10 years’ time) which can be attained for life from age 65, if they set aside $80,500 as a premium for CPF LIFE. This is provided if the retiree owns a home of his or her own.

The Full Sum is for CPF members who either do not own their own homes or do not wish to pledge it. The sum they should set aside is double the Basic Sum.

For retirees with higher CPF balances above the Basic Sum, the Panel recommended to provide the option for members to commit higher amounts to CPF LIFE of up to an Enhanced Sum, set at three times the Basic Sum, either through their CPF savings or through cash.

Take a look at the table below to see the possible options for CPF LIFE payouts for members turning 55 in 2016.

CPF Life


  1. Voluntary top-up

The Panel proposed that the Government strengthen the incentives to encourage the topping-up of the CPF accounts of lower-balance or non-working family members in order that they have their own CPF LIFE plan.

  1. Option to defer payout start age

The Panel also proposed to provide members the option to voluntarily delay their payout start age in exchange for higher payout for life. Specifically, it recommended that monthly payouts be permanently increased by 6-7% for every eyar that the payout start age is deferred. This payout start age will be renamed as “Payout Eligibility Age”.

  1. Adjust retirement sums after 2016 to account for both inflation and increases in standard of living

With expenditure outpacing inflation, the Panel proposed that the payouts for each successive cohort to take into account inflation and increase in standard of living.

  1. 3% increase of Basic Sum for successive cohort of members turning 55 from 2017 to 2020

Taking into account the annual inflation and increases in standard of living, the Panel also proposed that the Basic Retirement Sum be increased by 3% for each successive cohort of member turning 55 between 2017 to 2020. This is to ensure they have adequate monthly payouts after retirement.

  1. Allowing option to withdraw lump sum of Retirement Account Savings at the Payout Eligibility Age (PEA)

The Panel recommended allowing members to withdraw up to 20% of their Retirement Account Savings. The withdrawal includes the first $5,000 that can be withdrawn unconditionally from age 55. It should also be made available to CPF members who turn 55 from 2013 onwards.

  1. Incentives to encourage retaining of retirement savings in the CPF

Members need to exercise caution in withdrawing 20% of their Retirement Account savings, hence, the Panel recommended that the Government consider providing incentives to encourage CPF members, particularly those with low balances, to retain their retirement savings in their CPF should they have no urgent need to make a withdrawal.

  1. Providing advice and counselling to members

The Panel recognized that additional options in retirement could be confusing for some members. Hence, it recommended that the Government provides appropriate and timely information, and financial counselling, to help members make informed choices.





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