Editor’s note: This article is accurate as at 2017. CPF structure changes every year, please refer to CPF’s website for the latest updated information.
What Is CPF?
A quick lookup on CPF will lead you to the definition that The Central Provident Fund (CPF) is a comprehensive social security savings plan.
In short, CPF is implemented to ensure that Singaporeans save up for retirement, housing and healthcare. Let’s face the fact; there are way more Singaporeans believing that they are disciplined enough to save up for retirement, than those who managed to do so.
CPF contributions and allocation rate below age 55
The allocation of CPF is not that difficult to understand despite the wordy informative CPF website.
We summarised the contributions and the allocation rate of your monthly into the infographic below:
- An employee will contribute 20% of their wage to their CPF account.
- Their employer will contribute an addition 17% of whatever their wage will be to their CPF account.
- The CPF account will then be allocated to 3 different accounts: Ordinary Account (OA), Special Account (SA) and Medisave Account (MA).
Few things to take note:
- Percentage allocated to each account changes as you age
- After age 55, the contribution rate for both employee and employer decreases.
What happens at age 55?
At age 55, your OA and SA will combine to form your RA.
From there, you can choose three different schemes depending on the Retirement Sum in your RA.
One can either:
- Withdraw the difference after deciding to set aside for Full Retirement Sum or Basic Retirement Sum with property charge/pledge; or
- Keep the savings in CPF to earn interest.
Do take note that:
- For the first $30,000 of combined CPF balances, an extra 1% interest will be given. That is on top of the 1% additional interest on the first $60,000 of combined CPF balances.
Combined CPF Balances is the sum of Ordinary, Special, Medisave and Retirement Account.
Basic Retirement Sum in the next few years
The current Basic Retirement Sum is:
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