SINGAPORE - The Central Provident Fund (CPF) Basic Retirement Sum will be raised by 3.5 per cent per year for the next five cohorts of CPF members turning 55 from 2023 to 2027.
This is to provide them with higher monthly CPF payouts in their retirement years, given the rising standards of living, Finance Minister Lawrence Wong said during his Budget speech on Friday (Feb 18).
The Basic Retirement Sum for those turning 55 this year is $96,000.
The 3.5 per cent increase means that the sum will be $99,400 in 2023, $102,900 in 2024, $106,500 in 2025, $110,200 in 2026, and $114,100 in 2027.
The Basic Retirement Sum provides CPF members with monthly payouts to cover their basic living expenses during retirement.
There is no requirement for members to top up their CPF if they are unable to set aside the Basic Retirement Sum, Mr Wong said.
Those who set aside the sum when they turn 55 in 2027 will receive payouts of nearly $1,000 a month when they are 65, which will continue for the rest of their lives, he added.
"This will give them greater assurance for their basic retirement needs."
In a Facebook post on Friday (Feb 18) night, Manpower Minister and Second Minister for Trade and Industry Tan See Leng said that about eight in 10 active CPF members aged 55 in 2027 are expected to have at least the Basic Retirement Sum in their accounts - the highest level of people meeting the sum so far.
He added that there are no changes to CPF withdrawal rules.
In his Budget speech, Mr Wong also said that employer and employee CPF contribution rates for workers aged 55 to 70 will continue to be increased, following the recommendations of the Tripartite Workgroup on Older Workers.
Noting that the first increase was already implemented this year, he said employers were provided with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions.
The next step of the increase will continue in 2023, and employers will be provided with a similar offset, he said.
Mr Wong added that workers aged 55 to 70 will receive a total increase of 3 to 4 percentage points in their CPF contribution rates over these two years.
"We will enhance the retirement adequacy of Singaporeans, especially for senior workers who are preparing for retirement," he said.
This article was first published in The Straits Times. Permission required for reproduction.