NDR 2023: 1.4 million Singaporeans aged 50 and up to get more help meeting retirement needs
Lower and middle income Singaporeans aged 50 and above this year will get more help to boost their retirement savings under a new package announced on Sunday.
They will receive a yearly CPF bonus of up to $1,000 as long as they continue working. Those who have not met the Central Provident Fund (CPF) Basic Retirement Sum (BRS) will receive a one-time CPF Bonus of $1,500, while those who are 50 and above will receive a one-time MediSave Bonus of $1,000.
Targeted at those born in 1973 or earlier, the three-part Majulah Package will cost the Government about $7 billion and it will benefit those with lower incomes and less wealth.
A means test will be applied and factors such as income, annual value of residence, number of properties owned and CPF savings will be considered. The eligibility criteria will be announced in 2024.
The package will also benefit the Pioneer and Merdeka Generations, as part of a broader push to encourage older Singaporeans to continue working for as long as they can.
In total, the package is expected to benefit about 1.4 million older Singaporeans, or more than eight in 10 Singapore citizens aged 50 and above in 2023.
Announcing the package at the National Day Rally on Sunday, Prime Minister Lee Hsien Loong said: “Think of this as a 58th National Day present!”
As the Singaporean population continues to age, the Majulah Package is targeted at Singaporeans in their 50s and early-60s, a group that Mr Lee refers to as “young seniors”. The segment comprises those who are younger than the Pioneer Generation who are born between 1950 and 1959, and the Merdeka Generation who are born in 1949 or earlier. It includes those who are either about to retire or who may have recently retired.
Mr Lee said that the “young seniors” have benefited more from Singapore’s growth and have generally done better compared with the Pioneer and Merdeka Generations, but they have earned less over their lifetimes when compared with younger workers. They also have less time to benefit from improvements to the CPF system and have built up less retirement savings.
The package seeks to alleviate their anxiety about retirement, said Mr Lee, as they are “in a particularly sandwiched phase” of their lives having to shoulder the responsibility of caring for both the young and old in their families. Many have children who are young adults that are not yet fully independent, as well as elderly parents who may require additional care.
They also have their own health to worry about and these factors can lead to additional pressures on top of worries surrounding daily cost of living, Mr Lee said.
The first component of the package is the Earn and Save Bonus, which provides lower- and middle-income workers with a CPF bonus of between $400 and $1,000 yearly, as long as they remain in the workforce, whether full-time or part-time. This bonus will be credited into the recipient’s CPF account, on top of the usual employer and employee contributions.
Mr Lee said: “Most young seniors are still working, and have some years to go before retirement. We encourage you to continue working as long as you can.”
Giving an example of a lower-income 55 year-old who plans to retire at 65, Mr Lee said that over 10 years, his Earn and Save Bonus will add up to $12,000 in extra CPF savings, including interest.
To further prepare older Singaporeans for retirement, the package will also include a Retirement Savings Bonus (RSB), for those whose CPF balances have not reached the CPF BRS. They will receive a one-time CPF bonus of between $1,000 and $1,500.
The RSB will also cover those who are not working, as well as housewives who might have low CPF balances.
The BRS is the minimum amount a CPF member has to set aside at age 55 for retirement needs. Currently, the CPF BRS for those turning 55 this year is $99,400, and it will continue to increase by 3.5 per cent year-on-year, until 2027. This means that for those turning 55 in 2027, the CPF BRS will be $114,100.
With the cost of healthcare a cause of concern for many Singaporeans, especially as they age, the Majulah Package will also include a MediSave Bonus comprising a one-time top-up of between $500 and $1,000.
Describing the top-up as “modest”, Mr Lee said that it will give Singaporeans some extra buffer to help pay for medical expenses and insurance premiums.
Besides the Majulah Package, Mr Lee said that the Government will also be enhancing existing schemes, such as Silver Support, Workfare, and the Matched Retirement Savings Scheme. More details of the changes will be announced in 2024.
Mr Lee said that the Ministry of Finance will create a new fund to meet the full lifetime costs of the Majulah Package, using resources from this term of government.
He said: “We will honour this commitment without burdening future generations.”
Watch PM Lee’s National Day Rally speech here:
Get The New Paper on your phone with the free TNP app. Download from the Apple App Store or Google Play Store now