Higher CPF contribution from 2021 for higher CPF Life payout?

It is good news for those who may have dif­fi­culty sav­ings for the CPF Full Retire­ment Sum before age 65. From 1 Janu­ary 2021, the Singa­pore Gov­ern­ment will increase the CPF con­tri­bu­tion rate of those who are age 55–60 from 26% to 28%, with 1% each con­trib­ute by employ­er and employ­ee to the CPF Spe­cial Account, which earns high­er interest than CPF Ordin­ary Account. Even if you have the required CPF Retire­ment Sum, you have the choice to either save for the Enhanced CPF Retire­ment Sum, or with­draw the money as your fin­an­cial situ­ation requires you to.

For those age 60–65, the CPF con­tri­bu­tion rate will be increased from 16.5% to 18.5%, with 1% each con­trib­ute by employ­er and employ­ee to the CPF Spe­cial Account. For those age 65–70, the  CPF con­tri­bu­tion rate will be increased from 12.5% to 14%, with the extra 1.5% goes to the CPF Spe­cial Account too.  For those age 70 and above, the CPF con­tri­bu­tion rate will remain as 12.5%. This is to ensure that after the Re-employ­ment age (please see below) of 70, CPF mem­ber is still attract­ive to the employ­er to employ him, since employ­er has no oblig­a­tion to employ him bey­ond age 70.

Age bands Today 1 Jan 2021 Long Term Tar­get
55 and below 37% (No change) 37% (No change) 37% (No change)
Above 55–60 26% 28% 37%
Above 60–65 16.5% 18.5% 26%
Above 65–70 12.5% 14% 16.5%
Above 70 12.5% (No change) 12.5% (No change) 12.5% (No change)

The Offi­cial Retire­ment Age will be raised from 62 to 63 on 1 July 2022 and even­tu­ally to 65 by year 2030. The Re-employ­ment age will be raised by the same incre­ment­al num­ber from 67 to 68 on 1 July 2022 and even­tu­ally to 70 by year 2030 too.

There­fore, if you have not open the Sup­ple­ment­ary Retire­ment Scheme Account (SRS) that will help to reduce our per­son­al income tax, you have to open the SRS account from any of the 3 loc­al banks and made the first con­tri­bu­tion before 1 July 2022. Else the offi­cial with­draw­al age will be 63, instead of the cur­rent age 62.

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