SINGAPORE: The minimum Central Provident Fund (CPF) monthly payout for seniors on the Retirement Sum Scheme will be raised to S$350, up from S$250 currently.
This will take effect from Jun 1, as part of the Government’s efforts to boost retirement adequacy.
“We are considering what more we can do to enhance retirement adequacy in our Forward Singapore deliberations,” said Deputy Prime Minister Lawrence Wong in his Budget speech on Tuesday (Feb 14).
Under the Retirement Sum Scheme (RSS), seniors receive monthly payouts until their retirement savings run out. It is one of two retirement schemes under the CPF Board.
The RSS applies to those who are not on CPF Life, which automatically enrols those with at least S$60,000 in their CPF Retirement Account once they hit the age of 65 and provides lifelong monthly payouts in retirement.
Seniors on the RSS can opt to join CPF Life anytime before turning age 80 to receive lifelong payouts.
INCREASE SENIOR WORKER CPF CONTRIBUTION RATES
On Jan 1 next year, the Government will also increase CPF contribution rates for Singaporeans and permanent residents aged above 55 to 70 by between 1 and 1.5 percentage points.
Total CPF contribution rates will go up by 1.5 percentage points to 31 per cent for those aged above 55 to 60; and to 22 per cent for those aged above 60 to 65.
Meanwhile, total CPF contribution rates for workers aged above 65 to 70 will be increased by 1 percentage point, to 16.5 per cent.
First announced in 2019, the increases are being implemented gradually until around 2030. The first two steps of increases took effect in January 2022 and January 2023.
Similar to previous increases, the upcoming one will be fully allocated to the CPF Special Account to help senior workers save more for retirement, said the Ministry of Finance.
To mitigate the rise in business costs due to the increase, the ministry said the Government will provide employers with a one-year offset that is equivalent to half of the 2024 increase in employer contribution rates for every Singaporean and permanent resident they employ aged above 55 to 70.
ADDRESSING AN AGEING POPULATION
The changes announced on Tuesday were part of a slew of initiatives unveiled at this year’s Budget aimed at addressing the needs of Singapore’s ageing population.
Currently, one in six Singaporeans is aged 65 and above, making Singapore one of the fastest-ageing nations in the world. By 2030, one in four will be aged 65 and above.
During his Budget speech, Mr Wong said the burden of care for families will increase as people live longer and household sizes grow smaller.
To tackle this, he said more resources will be dedicated to supporting seniors, especially the lower-income, with their long-term care and healthcare needs.
He announced a S$500 million top-up to the ElderCare Fund to support means-tested subsidies for seniors who need home-based, centre-based or institutional care.
There will also be a S$1.5 billion top-up to MediFund to help those facing difficulties with their medical bills, even after subsidies.
To meet the retirement needs of Singaporeans, Mr Wong highlighted measures such as providing extra interest on lower CPF balances and supplementing the retirement income of seniors who had low incomes in their working years.
He encouraged family members to top up their loved ones’ CPF through tax reliefs and matching grants if they are able to.
The Government is also studying how it can enhance the range of care and support options within the community, as part of the Forward Singapore exercise.
This includes reviewing the operating model of Active Ageing Centres and studying how to better strengthen and coordinate providers in the aged care sector.
Last month, Singapore launched an updated national blueprint to help seniors age well, which included initiatives such as having more active ageing centres and better support for dementia patients and their caregivers.