SINGAPORE - Increases in the CPF Minimum Sum have been a source of concern for many. The CPF Board answers some frequently asked questions about the issue.

Why does the minimum sum keep rising? Isn't that like shifting goalposts, making it harder for Singaporeans to meet the amount set? Singaporeans will need more money in their retirement because they are living longer, daily needs have increased and prices will rise over time.

For members to achieve a steady stream of income that can cover their living expenses in retirement, the amount they need to set aside in the CPF - the minimum sum - has to increase correspondingly.

In 2003, the minimum sum was increased from $80,000 then, to $120,000 in 2003 dollars.

This was intended to enable CPF monthly payouts in retirement to be increased to improve retirement adequacy. The target of $120,000 (in 2003 dollars) was to be reached over a period of 10 years so as to give each successive cohort time to adjust.

Adjustments to the minimum sum were based on two components - the scheduled $4,000 stepped increase in real terms, and the headline Consumer Price Index that is used to account for inflation.

In 2012, the target was pushed back another two years to 2015 to make the increases more gradual because of the higher inflation in recent years.

The annual increases are specific to each group of members who turn 55 yearly. The minimum sum for those who have already turned 55 remains unchanged.

For those members who are unable to meet the minimum sum, there are schemes available.

For older Singaporeans, the Pioneer Generation Package will help ease the burden of health-care costs.

For home owners, there are schemes to help those who wish to unlock their housing equity: the Silver Housing Bonus and the Enhanced Lease Buyback Scheme.

To help more members meet the minimum sum, several policies are in place:

For low-income workers, there is the Workfare Income Supplement scheme, which pays into the CPF accounts of lower-wage workers.

In addition, extra interest of 1 per cent is paid on the first $60,000 of CPF savings so those with lower balances can grow their savings faster. About 60 per cent of members would be effectively earning 5 per cent on their retirement monies because of the extra interest.

The amount that employers must contribute to the CPF was raised as well, including sums for older workers and low-wage workers. Will the minimum sum continue to increase?

We have no plans to revise the minimum sum further in real terms in the near future (after the minimum sum target has been reached next year).

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