Top-ups to retirement savings in CPF hit $3 billion
36% more people made top-ups last year amid the uncertainties of Covid-19 pandemic
Amid the uncertainties of the Covid-19 pandemic last year, 36 per cent more Central Provident Fund (CPF) members made account top-ups under the Retirement Sum Topping-Up Scheme, putting in a total of $3 billion in their or their loved ones' accounts.
The Board yesterday said $1.2 billion of top-ups were made in the fourth quarter of last year alone.
In total, about 140,000 members boosted CPF savings last year.
More than one in three were first-timers, an increase of more than 50 per cent compared with the previous year, said the CPF Board.
The total top-ups last year were also 40 per cent more than the amount in 2019. Experts said the increase was probably spurred by rising awareness of the benefits of using CPF to save.
"Given the current low interest rate environment, and with more awareness and education around the use of CPF funds and how it offers members more attractive risk-adjusted returns compared with regular savings accounts and even some investments, it is not surprising to see a higher take-up rate for top-ups, especially given the uncertainties caused by Covid-19," said OCBC Bank's head of wealth advisory Kelvin Goh.
The spike among first-timers last year was led by members younger than 35 years old.
The group saw an 86 per cent jump in those topping up CPF accounts for the first time, compared with in 2019.
CPF Board said 27 per cent more people topped up their parents' CPF accounts last year as well.
The Retirement Sum Topping-Up Scheme allows members to use cash or existing CPF savings to top up their own or their loved ones' accounts.
For recipients below the age of 55, the Special Account can be topped up to the current Full Retirement Sum, which is $186,000 this year.
Retirement Accounts of those aged 55 and above can be topped up to the current Enhanced Retirement Sum, which is $279,000 this year.
Mrs Tan Chui Leng, CPF Board's group director of the retirement income group, said more members, especially young adults, are realising that topping up their CPF accounts is a key part of their retirement plan.
She added that by topping up in January each year rather than in December, CPF members can earn 20 per cent more interest on their CPF savings in just 10 years.
This is because CPF interest is computed monthly, said a CPF Board spokesman.
DBS Bank's head of financial planning literacy Lorna Tan said the trend of top-ups is expected to continue, especially with the start of the Matched Retirement Savings Scheme this year.
Under the scheme, each dollar of cash top-up to an eligible person's Retirement Account will be matched by the Government for the next five years, capped at $600 per year.
Ms Tan said: "For young people, their longer time horizon presents an excellent opportunity to grow their nest egg, thanks to the power of compounding."