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 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.