Central Provident Fund (“CPF”) is the mandatory social security system that enables working Singapore Citizens and Permanent Residents to set aside the funds for retirement. Currently, the employee contributes 20% of his/her monthly remuneration and his/her employer contributes 17% to this fund. This makes up the total of 37% of the monthly remuneration.
There are there accounts in CPF, namely Ordinary, Medisave and Special Account.
CPF in the ordinary account can be withdrawn by the employee at the age of 55 after taking into consideration of the minimum sum. The minimum sum to be set aside for retirement as of 2020.
- Basic Retirement Sum – $90,500
- Full Retirement Sum – $181,000
- Enhanced Retirement Sum – $271,500
More details are as follows:
In Singapore, one (ordinary Singapore citizen with average remuneration) is unlikely to meet the retirement sum as one will usually utilise the CPF fund for the payment of housing loan if he/she is married. However, the situation will be better for one who is single. Another way to ensure that one is able to meet the retirement sum at the age of 55 is not to use CPF to pay the housing loan. One will need to allocate the additional fund in cash to pay the housing loan if he/she opts not to use CPF to use. Another way is to explore the possibility of the renting the house. Such circumstance will make the possibility of meeting the retirement sum a likely reality.
On the whole, different individuals have different prevailing circumstance at that point of time. Make the appropriate decision which one deem fit. There is no right or wrong answer.
I personally do not harbour hope of being able to withdraw the CPF monies at the age of 55. I treat the fund as an non-existent at the present moment. If I am able to withdraw the fund at that point of time, it will be a surprise bonus for me. I treat my investment portfolio as my retirement plan now.
Each of their own.
My two cents worth of views.