THE Minimum Sum (MS) for Central Provident Fund members who turn 55 from July 1 will be raised to $106,000 - from the current $99,600, the CPB Board announced on Monday, along with other changes to the Medisave contributions and withdrawal rule.
This means that CPF members who turn 55 from July 1 to June 30 next year will have to set aside the $106,000 cash savings in their Retirement Account, from which they will will get a monthly payout of $910 from age 64 for about 20 years.
The current MS, which applies to members who turn 55 from July 1 2007 to 30 June, is $99,600, which gives a monthly payout of $790.
The new MS is in line with the announcements made in August 2003 that the CPF MS will be raised gradually to reach $120,000 in 2013, said a CPF board statement.
'The increase in MS, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement,' it added.
Medisave minimum sum and contribution to go up
Also, from July 1, the new Medisave Minimum Sum (MMS) will go up to $29,500 - from $28,500.
Members will have to set aside this amount, or the actual Medisave balance, whichever is lower, in their Medisave Account, when they withdraw their CPF on reaching 55.
Additionally, the Medisave Contribution Ceiling (MCC) will be raised from $33,500 to $34,500 from July.
This is the maximum balance each member should have in his Medisave Account. Any excess in contribution will be transferred to the member's Special Account if he is below 55.
For those above 55, the Medisave contribution in excess of the prevailing MCC will be transferred to their Retirement Account if they have a Minimum Sum shortfall.
The revisions to MMS and MCC are to ensure that Singaporeans have sufficient savings to meet their hospitalisation expenses, and have been adjusted for inflation, said the CPF Board.
Phasing out 50% withdrawal rule
The board also announced on Monday that members who are unable to meet the full CPF MS at age 55 are allowed to withdraw the first $5,000 or 50 per cent of their savings in their CPF Accounts, whichever is higher.
Members who are able to meet the full MS will be allowed to withdraw the remaining monies in their CPF accounts.
As announced in 2003, the percentage for withdrawal will be cut back from the current 50 per cent to 40 per cent Jan 1 next year, and this will be further reduced every year by 10 percentage points.
This means that from Jan 1, 2013, CPF members must meet the CPF and Medisave Minimum Sums first before they can withdraw their remaining Ordinary Account and Special Account balances at age 55.
However, CPF members can continue to withdraw the first $5,000 from their Ordinary Account and Special Account balances.
The change in the withdrawal rule will enable members turning age 55 from Jan 1 next year to set aside more savings for their retirement.