The CPF (Central Provident Fund) Retirement Sum plays a crucial role in ensuring that Singaporeans have sufficient financial support during their retirement. With changes expected by 2024, it’s essential to understand how this system works and what updates are being implemented. CPF aims to provide a structured way for individuals to save for their retirement by dividing savings into different categories—Basic, Full, and Enhanced Retirement Sums.
As Singapore approaches 2026, when the minimum retirement age will be raised to 64, CPF adjustments aim to reflect the rising cost of living. By the time a person turns 55, their savings in the Ordinary Account (OA) and Special Account (SA) will be moved to a newly formed Retirement Account (RA). This will allow them to receive monthly payouts starting at 65, helping them to cover living expenses during their golden years.
Contents
Retirement Sum Details
CPF sets retirement sums in three tiers: Basic, Full, and Enhanced. These amounts act as savings benchmarks, which determine the monthly payouts an individual will receive after turning 65.
Basic Sum
The Basic Retirement Sum (BRS) is designed to cover essential living expenses. In 2024, the BRS is set at S$102,900. Upon reaching 65, an individual who meets the BRS will receive monthly payouts of approximately S$840 to S$900.
The BRS will gradually increase over the next few years:
| Year | Basic Retirement Sum (BRS) | Monthly Payouts (Est.) |
|---|---|---|
| 2025 | S$106,500 | S$840 – S$900 |
| 2026 | S$110,200 | S$850 – S$910 |
| 2027 | S$114,100 | S$860 – S$920 |
Full Sum
The Full Retirement Sum (FRS) considers not only essential expenses but also potential housing costs. In 2024, the FRS is set at S$205,800, allowing for monthly payouts between S$1,560 and S$1,670. This sum will also increase:
| Year | Full Retirement Sum (FRS) | Monthly Payouts (Est.) |
|---|---|---|
| 2025 | S$213,000 | S$1,560 – S$1,670 |
| 2026 | S$220,400 | S$1,570 – S$1,680 |
| 2027 | S$228,200 | S$1,580 – S$1,690 |
Enhanced Sum
The Enhanced Retirement Sum (ERS) is meant for those who wish to receive the highest possible payouts during retirement. In 2024, the ERS is S$308,700, and payouts range from S$2,530 to S$3,550, depending on the individual’s savings.
| Year | Enhanced Retirement Sum (ERS) | Monthly Payouts (Est.) |
|---|---|---|
| 2025 | S$319,500 | S$2,530 – S$3,300 |
| 2026 | S$330,600 | S$2,610 – S$3,440 |
| 2027 | S$342,300 | S$2,690 – S$3,550 |
Policy Changes
By 2025, there will be key changes to the CPF Retirement Sum policy. One of the most significant changes is the increase in the maximum payout cap under the Enhanced Retirement Sum (ERS).
This increase aims to keep up with inflation and ensure that retirees have a sufficient income to support themselves in an increasingly expensive economy. The ERS, which is currently S$319,400, will rise to S$426,000 in 2025, followed by increases to S$440,800 in 2026 and S$456,400 in 2027. These adjustments will result in higher monthly payouts.
Eligibility Requirements
Eligibility for CPF Retirement Sum payouts depends on several factors, including the individual’s age, citizenship, and whether they participate in CPF Life. The main eligibility criteria include:
- Age Requirement: Individuals born before 1958 who are not part of CPF Life are eligible for CPF payouts.
- Citizenship: Only Singapore citizens and permanent residents qualify.
- Payout Start Age: Those under 70 can opt for later payouts for a higher monthly amount.
Non-permanent residents must meet the age requirement of 65 to begin receiving payouts. Interest of up to 6% per annum is paid to RA balances, ensuring that the account grows over time.
Retirement Account Creation
When an individual turns 55, the funds in their Special and Ordinary Accounts will be transferred into a new Retirement Account. This new account will generate monthly payouts starting at age 65. These savings will accumulate interest over time, based on the CPF Life Standard Plan. Once the individual meets their Full Retirement Sum (FRS), the remaining savings are transferred back to the Ordinary Account, where they can be accessed freely.
This transfer system ensures that long-term savings benefit from higher interest rates, providing retirees with financial stability throughout their retirement.
The changes being introduced in 2025 will enhance the financial security of retirees in Singapore, aligning with rising living costs and allowing for higher payouts to those with more savings.
In summary, the CPF Retirement Sum serves as a safety net, ensuring that Singaporeans have enough funds to support themselves during retirement. Whether an individual chooses the Basic, Full, or Enhanced Sum, CPF offers a well-rounded plan that adapts to different financial needs.
FAQs
What is the CPF Basic Retirement Sum for 2024?
The BRS for 2024 is set at S$102,900.
How much can I receive monthly with the Full Retirement Sum?
Monthly payouts range from S$1,560 to S$1,670.
What changes will take place in 2025 for ERS?
ERS will increase to S$426,000, raising monthly payouts.
When do CPF payouts start?
CPF payouts begin at age 65.
What interest rate is earned in a Retirement Account?
Up to 6% interest is earned annually on RA balances.
