Information about CPF

The Central Provident Fund (CPF) is a government-run social security scheme. Funds are contributed both by you and your employer and can be used by you for retirement, home ownership, healthcare expenses, your child?s tertiary education, investments or insurance. Under statutory law, all Singapore citizens and Permanent Residents in employment have to contribute to this scheme, while self-employed Singapore citizens and Permanent Residents have to contribute to Medisave only.

From 1 January 2004, the total CPF contribution rates are 33% if you are below 55 years old, 18.5% if you are between 55 and 60, 11% if you are 60 to 65, and 8.5% for people aged over 65 years. The CPF is divided into four types of accounts Ordinary, Special, Medisave and Retirement (for those aged over 55 years).

The overall scope and benefits of the CPF encompass the following:

Retirement, Healthcare, Home Ownership, Family Protection and Asset Enhancement.

Working Singaporeans and their employers make monthly contributions to the CPF and these contributions go into three accounts:

Ordinary Account - the savings can be used to buy a home, pay for CPF insurance, investment and education.

Special Account - for old age, contingency purposes and investment in retirement-related financial products.

Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance.

Retirement Account: You can withdraw your CPF ordinary account savings in a lump sum when you reach 55 years old (on or after 1 Jul 1999), after a statutory required minimum sum of S$84,500 has been set aside. The amount you can withdraw will depend on your available balance. You can make future withdrawals six months after the initial withdrawal (if you are retired) or every three years. Fixed monthly withdrawals from the retirement account will start when you are 62 years old. Alternatively, the entire amount can be used to purchase an annuity, which also provides a fixed monthly income.

Your CPF savings earns interest. Savings in the Ordinary Account earn a minimum interest rate of 2.5% per annum, while savings in the Special and Medisave Accounts earn additional interest of 1.5 percentage points above the prevailing Ordinary Account interest rate.

Securing your retirement

It is important to plan the use of your CPF savings to ensure the following:

• Sufficient savings to see you through your retirement
• A property that is fully paid-up when you retire
• Sufficient savings to meet your medical needs in your old age

Your CPF will provide you with a retirement income to meet your basic needs in old age. Members are encouraged to supplement their retirement income with their personal savings.

To ensure that you have a roof over your head when you retire, map out your finances carefully when you buy a home. Buy a home that you can afford so that your home will be fully paid-up when you retire.

Saving for future medical expenses is important as the need for medical care increases significantly as you grow older. Use your Medisave wisely by staying in affordable wards when hospitalised. You should also stretch your healthcare dollar by buying medical insurance such as MediShield. This will help you to meet the treatment expenses for prolonged or serious illnesses.

CPF official site