What is Central Provident Fund and its Importance in Singapore

The Central Provident Fund OR CPF in Singapore is a compulsory social security savings scheme that is to be partly funded by the employer and partly by the employee. The CPF serves as an integral cog in the social security system of Singapore as this fund will be used to meet your retirement needs, healthcare needs and housing needs. In case of lower wage workers, the government of Singapore steps in to supplement their CPF savings with schemes including Workfare and top ups to Medisave in case of senior citizens to name a few.

Important Points to consider regarding your Central Provident Fund (CPF)

Withdrawal Age for CPF – You can start withdrawing from your CPF savings from the age of 55.

Payout Eligibility Age for CPF – You will start receiving funds in the form of monthly payouts from your CPF Account at the age of 65, for those who are born after 1953.

Basic Retirement Sum for CPF – For those members who will turn 55 years old in 2016, the basic retirement sum is SGD 80, 500. You also have the option of withdrawing your CPF savings in excess, over and above your basic retirement sum if you own a property or have sufficient CPF property charge on a property and choose to pledge it.

Basic Healthcare Sum for CPF – Starting from 1st January, 2016, the basic healthcare sum for CPF is SGD 49, 800. The BHS is designed to cover your basic and subsidized healthcare needs throughout your old age. If the amount exceeds the BHS, then it will directed to your Retirement or Special Accounts to give boost to your monthly payouts. Your BHS cohort is fixed when you turn 65 years and will remain the same thereafter. If you are unable to meet your cohort BHS, in that case you are not required to top up your Medisave account.

Central Provident Fund (CPF) Accounts

Every working Singaporean has monthly contributions made towards their Central Provident Fund. These contributions are made by both, the employer and the employee. The contributions made go into the following accounts –

Ordinary Account – This account is used for retirement and housing needs.

Special Account – This account is used for retirement needs only.

Medisave Account – This account is used for healthcare needs only.

Central Provident Fund (CPF) Retirement Sum

Upon reaching 55 years of age, the savings from your Ordinary Account and Special Account will be transferred to your Retirement Account and will become part of your Retirement sum. The CPF Board always ensures that the Basic Retirement Sum is known to the citizens of Singapore well in advance so they can start preparing for their retirement accordingly.

Sebastian Taylor is a young and dynamic digital marketing professional with years of experience in content writing he is currently working with in a startup Fin-tech head quarters in Singapore branch.