CPF Advisory Panel that was set up in September 2014 has just released the part 1 of their recommendation on CPF changes. These changes are likely to take place in 2016 as all figures stated are in 2016 dollars.
CPF Retirement Sum
There will be 3 tiers of retirement sum that a CPF member can set aside. The first basic tier is called the Basic Retirement Sum, $80,500 in 2016. Member will expect to get $650 to $700 monthly payouts from age 65 onwards for life. However, this tier only applies to house owner who has pledged his property. Therefore, if the member sells his property, the amount of the pledge will be returned to his CPF to supplement his basic payout, particularly if he now needs to pay rent on his accommodation.
CPF Member who does not own his home should set aside the Full Retirement Sum at two times the BRS, or $161,000 in 2016. This will translate to $1200 to $1300 monthly payouts from age 65 onwards.
For those who wish to get higher payouts during their retirement, they can set aside Enhanced Retirement Sum of $241,500, which is three times the Basic Retirement Sum. The estimated monthly payout will be between $1750 and $1900. CPF member can do so by topping up his retirement account with his CPF savings or cash.
From 2017, the Basic Retirement Sum will increase at 3% p.a. till 2020 to factor in inflation and higher cost of living.
CPF Lump Sum Withdrawal
CPF member will now be allowed to withdraw 20% of their Retirement Account Savings at the Payout Eligibility Age, previously known as Drawdown Age. This withdrawal amount includes the $5000 they were eligible to withdraw from age 55.
CPF member can also delay the Payout Eligibility Age till 70, and to expect to get 6% to 7% more monthly payouts for each year deferred.
CPF member can also transfer amounts in excess of the Basic Retirement Sum of $80,500 to his family member’s Special Account or Retirement Account. This is especially important for a housewife who has low CPF savings and thus dependent on her husband CPF Life payouts, as women tend to outlive their husbands.
The CPF Advisory Panel will continue its studies on alternative private investments and annuities and introduce a CPF LIFE plan with an escalating payout structure. The recommendation is expected to be ready by mid-2015.