Best Things You Should Know About CPF for Retirement in Singapore

You’ve probably heard mutterings about this evil thing called the CPF for Retirement Sum, and how it’s getting higher every year. It used to be called the CPF Minimum Sum, which both upset and confused Singaporeans, and so the decision was made to rename it to the CPF for Retirement Sum. But what the heck is it really, and how does it affect you?

First, you have to understand the two main retirement payout programmes available.

The older CPF For Retirement Sum Scheme requires you to have a minimum amount in your CPF accounts when you retire, to ensure you receive monthly payouts that can support a basic standard of living. How much you get each month depends on how much you have in your RA.

The newer CPF LIFE (Lifelong Income For The Elderly) scheme will give you monthly payouts for the rest of your life. So you don’t have to worry about outliving your CPF savings if you become immortal so long as you are able to accumulate enough before starting your payouts.

You can apply to receive monthly payouts from the CPF payout eligibility age (previously known as the drawdown age). The payout eligibility age is currently 65. Payouts are estimates based on CPF LIFE Standard Plan parameters, and computed as of 2019. Payouts may also be adjusted to account for long term changes in interest rates or life expectancy.

The table below illustrates the retirement sums and corresponding CPF LIFE payouts for members who turn 55 in 2019.

	Your monthly payout for life from 65	Retirement Account savings required at 55
For members who: Own a property. Have a sufficient property charge or choose to pledge your property.	$730 – $790	Basic Retirement Sum (BRS) $88,000
For members who either: Do not own a property. Own a property but do not have a sufficient property charge and choose not to pledge your property.	$1,350 – $1,450	Full Retirement Sum (FRS) $176,000 FRS = 2 × BRS
If you wish to put more savings in CPF LIFE to receive higher payouts	$1,960 – $2,110	Enhanced Retirement Sum (ERS) $264,000 ERS = 3 × BRS

CPF for Retirement Sum Scheme

The Cpf for Retirement Sum Scheme provides CPF members with a monthly income to support a basic standard of living during retirement.

To better mitigate longevity risks, the CPF LIFE Scheme was introduced in 2009 which provides a monthly income for as long as you live. You will be placed on CPF LIFE if you are a Singapore Citizen or Permanent Resident born in 1958 or after, and have the following Retirement Account balances:

You turned 55 between 1 January 2013 and 30 April 2016	You turned 55 on 1 May 2016 and after
At least $40,000 in your Retirement Account when you reach 55 years old; or At least $60,000 in your Retirement Account six months before you reach your payout eligibility age.	At least $60,000 in your Retirement Account six months before you reach your payout eligibility age.

If you are not placed on CPF LIFE, you can apply to join anytime between your payout eligibility age and before you turn 80 years old, or remain on the Retirement Sum Scheme.

What happens if not meet the Basic CPF for Retirement Sum?

Your monthly retirement payouts will then be pro-rated based on how much you have. Now, how much of your money do you actually get to withdraw in a lump sum when you turn 55? Under normal circumstances, you will be required to leave at least the Full Retirement Sum in your CPF. You can withdraw the rest.

It’s possible to withdraw your RA savings up to the Basic Cpf for Retirement Sum if you’re a property owner, but this requires you to jump through some hoops. You need to “pledge” your property to CPF. This means you promise to pay back the pledged amount (together with any CPF money used, with interest) back into your CPF RA should you sell your property.

If you do not own property or are unwilling to put a pledge on it, you have no choice but to leave at least the Full Retirement Sum in your account. As for the Enhanced Cpf for Retirement Sum, leaving that much money in your account is optional, and should be done only if you wish to receive higher payouts.

New CPF for Retirement - What is CPF Life?

CPF LIFE is the current incarnation of the Central Provident Fund’s retirement scheme. Previously, the retirement scheme was called the CPF Minimum Sum Scheme, later renamed as the CPF Retirement Sum Scheme. Tied to both schemes is the CPF Retirement Account (RA), which is what every Singaporean gets when they turn 55 years old. At this point, the balance in your CPF Ordinary Account (OA) and Special Account (SA) are combined to form the RA.

If your total balance exceeds the Full cpf for Retirement Sum (currently $181,000), the excess will be left in your OA. With the older CPF Minimum / Cpf for Retirement Sum Scheme, you get monthly retirement payouts drawn from your RA, essentially treating it as a retirement fund. Trouble is, it means payouts will stop when your RA balance dwindles to $0 (expected to be 85 to 95 years old).

So CPF now has another retirement scheme called CPF LIFE. Actually it’s CPF “LIFE”, which stands for Lifelong Income For the Elderly. As the “Lifelong” bit suggests, your retirement payouts will never stop. The trade-off is that you need to pay a lump sum premium, deducted from your RA, when you join the scheme. This means there’s a chance your Retirement Account will be depleted right from the start.

This has implications if you’re planning to use your CPF balance to pay for housing past age 55, like if you’re servicing a long-term home loan. It’s still possible to do so with your RA balance, but only the amount above the Basic Retirement Sum (now $90,500). But this also means your monthly retirement payouts will be lower.

Eligible to CPF Life in Singapore

Assuming you won’t feel the need to use your RA to buy property, CPF LIFE is a lot more attractive than the CPF for Retirement Sum scheme for the simple reason that you just don’t know how long you’ll live.

The retirement payouts are for life, even if you get bitten by Edward Cullen and become immortal. Since Singaporeans love buffets and unlimited data so much, I’d expect most of us to be all over this.

There’s no need to frantically look for a sign-up link, though, because as long as you’re under 61 years old, you won’t be left out of the scheme. In typical CPF fashion, you’ll be automatically enrolled, lest you take leave of your senses and neglect to do so.

Here are the auto-enrolment “rules”:

Date of birth	CPF RA balance	Will you auto-join CPF LIFE?
Up to 31 Dec 1957	–	No (but you can apply to join)
1 Jan 1958 to 30 Apr 1961	$40,000 at age 55 OR $60,000 6 months before age 65	Yes
1 May 1961 & after	$60,000 6 months before age 65	Yes

If you’re not automatically placed on CPF LIFE for some reason – most likely because your RA balance isn’t high enough – you’ll be placed on the cpf for Retirement Sum Scheme.

But you can still opt-in for CPF LIFE anytime from age 65 (the current payout eligibility age, for those born in 1954 or later) to age 79 – yes, even if you’ve already started receiving cpf for Retirement Sum payouts by then.

You can apply for CPF LIFE: