CPF payouts increased by 25% from 2019 to 2021, set to keep growing for future cohorts, Latest Singapore News - The New Paper

CPF payouts increased by 25% from 2019 to 2021, set to keep growing for future cohorts

This article is more than 12 months old

Central Provident Fund (CPF) monthly payouts have increased with each successive cohort and are set to keep going up for future cohorts as well, according to a trends report by the CPF Board out on Thursday (May 5).

Median payouts have risen by 25 per cent from 2019 to 2021, thanks to income growth, increased labour force participation and overall improvements to the CPF system.

Figures show that a CPF member who turned 65 in 2019 got monthly payouts of $460, compared with the $580 that a member who turned 65 in 2021 now gets.

However, CPF members can generally gain 30 per cent more in their monthly payouts if they defer their payouts to 70 years old, the study showed.

A person who turned 65 in 2019 is projected to get $610 if he defers his payouts to age 70, the latest age at which payouts can start. Meanwhile, a person who turned 65 in 2021 can get $760 if he starts the payouts at 70 years old.

Indeed, the proportion of members choosing to defer their payouts has increased, CPF Board said in its report.

This proportion stood at 43 per cent in 2019 but grew to 54 per cent in 2021.

The figures refer to all members who can start their payouts at 65 years old and are on the CPF Life Standard Plan.

The Standard Plan provides level payouts that remain the same for the rest of a member's life. This is opposed to the Escalating Plan, for instance, where monthly payouts increase by 2 per cent every year to help protect the member against rising prices.

But the report also noted that about 70 per cent of members made lump-sum withdrawals before payouts began at the age of 65.

Members can make withdrawals from 55 years old.

This is despite the fact that payouts would be higher if members did not make withdrawals before they turned 65, thanks to the interest compounding over the 10 years from the time they turned 55.

The interest rate floor stands at 2.5 per cent for the Ordinary Account and 4 per cent for the Retirement Account from April 1 to June 30 this year.

The monthly payouts are also expected to increase for future cohorts, because of the measures to help boost retirement adequacy.

For example, the CPF contribution rates for those aged 55 to 70 will be increased gradually to help workers earn more and save more even after turning 55.

The retirement and re-employment ages for Singapore workers will also be progressively raised to 65 and 70 by 2030, to support older Singaporeans who wish to continue working.

For low-wage workers, Workfare will be enhanced to increase payouts for all recipients and be extended to younger workers from 30 years old.

The Matched Retirement Savings Scheme launched last year will also help seniors who have not reached their Basic Retirement Sum to build their retirement savings.

Eligible members aged 55 to 70 with lower balances can receive a dollar-for-dollar matching grant – up to $600 for a year – for cash top-ups made to their Retirement Account under this scheme.

People can also use a CPF tool to estimate the amount of monthly payouts they will get so that they can plan their future retirement lifestyle. It is available at this website.