Singaporeans who turn 55 years old between 1 July 2014 and 30 June 2015 will have to set aside $155,000 in their retirement accounts, up from the existing $148,000.
According to CPF Board, $155,000 is equivalent to $117,500 in 2003 dollar terms. Therefore, by next year, the CPF Minimum Sum will be able to reach the $120,000 in 2003 dollar terms. From 2016 onwards, the CPF Minimum Sum will only be adjusted upwards based on inflation rate.
The Medisave Minimum Sum will be raised to $43,500 from 1 July 2014. Only amount in excess of the CPF Minimum Sum and the Medsiave Minimum Sum can be withdrawn from the CPF accounts at age 55.
Correspondingly, the Medisave Contribution ceiling will also be increased from $45,500 to $48,500 with effect from 1 July 2014.
Interest rate for SMA monies
Savings in the Special and Medisave Accounts (SMA) currently earn either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is the higher. The interest rate on SMA savings is adjusted quarterly, based on interest rates on 10YSGS over a preceding 12-month period. The average yield of the 10YSGS plus 1%, from March 2013 to February 2014, is 3.19%. Therefore, the SMA interest rate from 1 April 2014 to 30 June 2014 will be maintained at the current floor of 4%.
Interest Rate for RA Monies
New Retirement Account (RA) savings are invested in SSGS which earn a fixed coupon equal to either the 12-month average yield of the 10YSGS plus 1% at the point of issuance, or 4%, whichever is the higher, adjusted yearly. Given the lower 10YSGS yield, new RA savings will earn a fixed coupon of 4%.
An additional 1% interest will continue to be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA). The additional interest received on the OA will go into the member’s Special Account (SA) or RA to enhance his retirement savings. If a member is above 55 years old and participates in the CPF LIFE scheme, the additional 1% interest will still be earned on his combined balances, which includes the savings used for CPF LIFE.
Savings in the CPF Special and Medisave Account (SMA) currently earn the higher of either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%. The interest rate on SMA savings is adjusted quarterly, based on interest rates on 10YSGS over a preceding 12-month period. The average yield of the 10YSGS plus 1%, from 1 December 2012 to 30 November 2013, is 2.93%. Therefore, the interest rate for CPF SMA will continue to be 4% p.a. from 1 Jan 2014 to 31 March 2014.
Savings in CPF Retirement Account (RA) earn the higher of either 4% or the 12-month average yield of the 10YSGS plus 1%, and adjusted yearly. Therefore, the 4% p.a. interest rate will apply to CPF RA from 1 January 2014 to 31 December 2014.
The additional 1% interest will continue to be paid on the first $60,000 of the combined balances, with up to $20,000 from the Ordinary Account (OA). The additional interest received on the OA will go into the SA or RA to enhance the retirement savings.
From 1 January 2014, the Medisave Required Amount (MRA) will be adjusted to $40,500 from the current $38,500, which is the same as the Medisave Minimum Sum (MMS). This is the amount that CPF members are required to top up to the Medisave Account (MA) to the current MMS/MRS when they make a CPF withdrawal at age 55.
CPFB will distribute $29m of surplus from its Dependants’ Protection Scheme (DPS) to members who had active covers when DPS was privatised on 17 September 2005. This rebate will be credited to their CPF OA on 15 December 2013.
With effect from 1 July 2013, the CPF Minimum Sum will increase from the current $139,000 to $148,000. The amount will continue to increase every year till 2015, when it reaches $120,000 in 2003 dollars. So if assuming inflation rate of 3% p.a. in 2014 and 2015, the CPF Minimum Sum is expected to reach $166,000 in 2015. By 2025, the CPF Minimum Sum may increase to $223,000!
The Medisave Minimum Sum will increase from $38,500 to $40,500. At or after age 55, CPF members can withdraw their Medisave funds in excess of this minimum sum. Accordingly, the Medisave Contribution Ceiling will be increased to $45,500, $5000 above the Medisave Minimum Sum.
There are currently two schemes available for eligible Singapore Senior Citizen to unlock cash from thier private property or HDB flat.
- Silver Bonus Scheme for elderly home owner (55 years and above) who choose to downgrade from either larger HDB flat or private property of annual value $13,000 or less to a 3-room flat or smaller.
- Lease Buyback Scheme which allows elderly flat owner (63 years old and above) to live in his 3-room or smaller flat for the next 30 years, but sell the remainder tail end of the 99-year lease back to HDB.
From 1 Feb 2013, a major change to Silver Bonus Scheme will see more cash proceeds to be given to the flat owner. Previously, all the proceeds from the sale of the flat has to be used to top up the CPF Retirement Accounts of the flat owners. This usually results in leaving the elderly flat owners with the $20,000 cash bonus given by the government for downgrading thier property. Under the new scheme, only $60,000 is required for topping up the Retirement Accounts of the flat owners in the household at first. The owners can keep the next $100,000 of the net proceeds from the sale of the flat. The excess amount beyond $160,000 will then be used to top up the Retirement Accounts further.
Under the Enhanced Lease Buyback Scheme, which also take effect from 1 Feb 2013, the cash bonus from the government will increase from $10 000 to $20 000, as long as the top up for the Retirement Accounts of the flat owners total to $60,000 or more. Otherwise, the cash bonus will be tagged to $1 for every $3 top up. The net proceeds from the sale of lease will be used to top up the lessees’ Retirement Accounts to the amount shown in the following table before up to $100,000 cash can be withdrawn.
||To Top Up till CPF Retirement Account has:
||Prevailing MS (currently $139,000)
|71 – 79
||Prevailing MS — $10,000 (currently $129,000)
||Prevailing MS — $20,000 (currently $119,000)
Amount in excess of $100,000 will be used to help the lessees with the lowest Retirement Account balance to meet the prevailing Minimum Sum (i.e. $139, 000 currently).
For more details on Silver Bonus Scheme and Enhanced Lease Buyback Scheme, please visit www.hdb.gov.sg.
From 1 Nov 2012, the many different CPF top-up schemes will be merged to Minimum Sum Topping-up Scheme (MSTS). This will make the calculation on how much can be contributed towards the family members’ Special Account (SA) or Retirement Account (RA) easier.
Under the MSTS, you can use cash or CPF money to top-up the family members’ SA/RA up to the prevailing CPF Minimum Sum, currently at $139,000. The family members include parents, grandparents, spouse, siblings, parents-in-law (from 1 Jan 2013) and grandparents-in-law (from 1 Jan 2013). Each qualifying giver can enjoy tax relief of up to $7,000 for cash top-ups to your own CPF and another $7000 to your family members’ accounts. To qualify for tax relief for cash top-ups for spouse and siblings, they must not have income exceeding $4,000 in the year preceding the year of top-up or they are handicapped.
There is a limit to the top-up that the recipient can receive in his CPF SA/RA. For those who are below 55 years old, it is the difference between the prevailing Minimum Sum and the net balances in his SA account, including the amount withdrawn for investments. For those age 55 and above, the limit is the prevailing Minimum Sum and the net balance in his RA account, excluding the interest earn since age 55, Government grants received and any amount withdrawn.
Employer can also claim tax deduction of up to $7000 by topping the staff’s CPF RA/SA account, while the staff can claim the equivalent amount of tax relief.
CPF Board has announced that the CPF interest rate for Special, Medisave and Retirement accounts (SMRA) will retain the 4% minimum interest rate till end of 2013. It is supposed to end this year but due to the low interest environment now, CPF Board has decided to extend another year.
CPF SMRA was supposed to peg to the 12-month average yield of 10-year Singapore Government Securities plus 1 per cent since 1 Jan 2008. If this formula was to be use how, the interest rate for SMRA will only be 2.55%!
So good news to all Singaporean.
There are currently two channels to top-up your Special Account (SA) and Retirement Account (RA).
They are :-
a) Voluntary Contributions (VC) to a member’s Retirement Account (RA); and
b) Top-ups made under the Ordinary Account-to-Special Account (OA-to-SA) Transfer scheme.
The above two will be merged into the existing Minimum Sum Topping Up (MSTU) Scheme. This simplification will align the top-up limit and terms and conditions so that it is less confusing to the member.
The New Aligned Top-Up Limits
For top-ups into the SA, members who are less than 55 years old will be able to receive top-ups up to the prevailing Minimum Sum, minus the sum of their SA cash balance and SA savings which they have used for investment.
For top-ups into the RA, members who are 55 years old or older will receive top-ups up to the prevailing Minimum Sum, minus their RA cash balance. The RA cash balance excludes amounts such as interest earned, government grants received and amounts that members have withdrawn.
Tax Relief extended to parents-in-law and Grandparents-in-law
Anyone who makes a cash top-up to his own CPF account and/or receives a cash top-up from his employer will receive up to $7,000 of tax relief, and up to another $7,000 for cash top-ups to eligible family members in a calendar year. Eligible family members currently refer to parents, grandparents, spouses and siblings. This will be extended to parents-in-law and grandparents-in-law from 1 January 2013. For members who make top-ups to their spouse or siblings, they are eligible for the tax relief if their spouse or siblings have an annual income below $4,000 or are handicapped.
Source : http://mycpf.cpf.gov.sg/CPF/News/News-Release/N_10Sept2012_MF.htm
It was reported in The Straits Times on 25 August 2012 that senior citizens can get financial help for their rehabilitation transport cost or buy mobility devices under the Seniors’s Mobility Fund manged by Agency for Integrated Care.
To get help to pay for transport to and form a day rehabilitation centre,applicants must be at least 55 years old, wheelchair-bound and from households with a per capta income of $2200 a month or less. Per capial income is calculated by dividing the total income of a household by the number of people living there.
Those who want help with the purchase of mobility aids have to be at least 60
years old and have a per capita income of up to $1500 a month. The fund will pay up to 90% of the cost, or up to $270 for a wheelchair and $135 for a walking aid, whichever is lower.
Agency for Integrated Care can be contacted at 66036800.