CPF CELING
CPF contribution ceiling will be increased from $5000 to $6000 with effect from 1 Jan 2016. This will help to boost another $170 from employer and $200 from employee for those earning more than $6000 monthly salary and below 55 years old. Though the take-home pay for these employees will reduce by $200, the savings for retirement will be boosted by these extra savings.
CPF CONTRIBUTION RATE
The CPF contribution rate for employee 50 years and above will be increased from 1 January 2016.
- Above 50 to 55, employer CPF rate will be increased from 16% to 17%, while employee CPF rate will be increased from 19% to 20%;
- Above 55 to 60, employer CPF rate will be increased from 12% to 13%, with no change to the current employee CPF rate of 13%;
- Above 60 to 65, employer CPF rate will be increased from 8.5% to 9%, with no change to the current employee CPF rate of 7.5%.
In addition, for CPF members aged 55 and above from 1 January 2016, the first $30,000 from the CPF accounts will earn extra 1% per annum, on top of the current 1% extra interest on the first $60,000 of their total CPF savings. That is,
Total CPF balance |
Interest Rate |
If in Special/Retirement/Medisave Accounts |
If in Ordinary Account |
First $30,000 |
6% |
4.5% |
Next $30,000 |
5% |
3.5% |
Remaining balance above $60,000 |
4% |
2.5% |
This translates to extra $300 savings per year for the next 10 years before CPF Life payout starts at 65. Assuming the yearly $300 interest earned goes into the Retirement Account which earns 4% interest, this translates to $3,745 after 10 years. With higher amount in CPF Retirement Account, CPF members can expect higher payout from their CPF Life.
SUPPLEMENTARY RETIREMENT SCHEME
The caps on contribution to the voluntary retirement savings scheme, Supplementary Retirement Scheme (SRS) will be increased from 1 January 2016. For Singaporean and Permanent Resident, the cap will be increased from $12,750 to $15,300. The cap for foreigner will be increased from $29,750 to $35,700. This will help to increase the personal income tax savings, as the amount put into SRS will enjoy tax relief. Moreover, retirement cashflow will be improved when SRS money is allowed to be withdrawn without penalty from age 62 onwards.