CPF Special Account to close from Jan for people aged 55 and above

The Special Account for people aged 55 and above will be closed from the second half of January 2025, one of a slew of changes in the Central Provident Fund (CPF) system in the new year.

Other changes include increases in the enhanced retirement sum and CPF contributions for platform workers, and a higher CPF monthly salary ceiling to keep pace with rising wages.

From the second half of January, the savings in the Special Account of affected CPF members will be transferred to the Retirement Account, up to the cohort’s full retirement sum.

Any remaining Special Account savings will be transferred to their Ordinary Account. The members have the flexibility to withdraw the money when needed or transfer it to their Retirement Account, up to the enhanced retirement sum.

“The principle behind the closure of the Special Account for members aged 55 and above is to right-site CPF savings, such that only CPF savings committed towards long-term retirement needs earn the higher long-term interest rate,” the CPF Board said on Dec 16.

Funds in the Retirement Account will continue to earn the higher long-term interest rate (floor rate of 4 per cent per annum) and receive higher monthly payouts in retirement, it added.

CPF account holders will be notified through a hardcopy notification as well as an e-mail or SMS after their Special Account is closed.

From Jan 1, the enhanced retirement sum will be raised to $426,000, which is four times the basic retirement sum, instead of three times.

It is the maximum amount that CPF members aged 55 and above can choose to top up to in their Retirement Account for higher monthly payouts.

Those who top up to $426,000 can receive about $3,330 in monthly payouts for life from age 65. This is an increase from about $2,530 today, based on the current enhanced retirement sum of $308,700.

The CPF monthly salary ceiling will also be raised to keep pace with rising salaries and help middle-income Singaporeans save more for retirement.

From Jan 1, the ceiling will be raised to $7,400, but the CPF annual salary ceiling of $102,000 remains unchanged.

CPF contribution rates for senior workers will also increase to strengthen their retirement adequacy.

From Jan 1, the contribution rates for members over 55, to 65 will be raised by 0.5 percentage point for the employer and 1 percentage point for the employee.

With the closure of the Special Account, the increase in CPF contributions will be fully allocated to the Retirement Account, up to their cohort’s full retirement sum.

There will also be more help for senior citizens with lower retirement savings.

From Jan 1, the grant cap for the matched retirement savings scheme will be increased to $2,000 per year from $600 and the age cap will be removed. Under this scheme, senior citizens with lower retirement savings receive higher monthly payouts as the government matches cash top-ups to their Retirement Account.

CPF Board said these enhancements will double the number of eligible members to about 800,000 per year, allowing them to boost their retirement savings faster.

The Silver Support Scheme will also be enhanced come January, with quarterly payments increased by 20 per cent to strengthen support for about 290,000 eligible senior Singaporeans who have less in retirement.

The qualifying household monthly income per person will also be increased from $1,800 to $2,300. 

From Jan 1, platform operators will deduct CPF contributions from platform workers, such as ride-hailing app drivers and delivery workers. They will also submit the platform workers’ share of contributions and their own share, if any, to CPF Board every month.

Increased CPF contributions will be mandatory for platform workers born on or after Jan 1, 1995.

Their CPF contribution rates will increase gradually over five years to align with those of employees and employers, reaching 20 per cent for the workers’ share and 17 per cent for the platform operators’ share by 2029.

In addition, there will be more help to ensure that lower-income workers continue to benefit from the Workfare Income Supplement Scheme even as their wages grow.

From Jan 1, the qualifying income cap will be increased from $2,500 to $3,000. About half a million lower-income workers will benefit from the scheme. 

Workfare payments will also be increased, with eligible workers receiving up to $4,900 per year with effect from 2025, as compared to $4,200 per year today.