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When CPF Board was first set up in 1955, life expectancy at birth was 61 years. The average life expectancy is now 80 years. Today, eight adults of working age support an elderly person 65 years old and above, but this figure will halve to just four by 2030. While we are living longer, our family size is getting smaller. An update to the CPF scheme and other measures will better prepare Singaporeans for a secure retirement.
To help Singaporeans work longer and have enough savings for retirement, the Prime Minister announced the following key changes at the National Day Rally 2007.
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| Re-Employment Legislation & Higher Workfare Income Supplement To Help You Work Longer |
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From 1 January 2012, employers will be required by law to offer to workers reaching age 62, re-employment up to age 65 as a first step, and eventually to 67.
To encourage older workers to continue working, a higher Workfare Income Supplement (WIS) will be given to workers above 55 years and above 60 years. The payout will be up to twice the current amounts. For example, a worker aged 62 earning $1,000 a month will now get $200 a month from WIS instead of $100 before the increase.
For more information on re-employment legislation, please visit the MOM website www.mom.gov.sg or call 6438-5122. |
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| Additional 1% p.a. Interest To Enhance Your Returns |
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From 1 January 2008, you will earn an additional 1% p.a. for the first $60,000 in your CPF accounts combined, including up to $20,000 from the Ordinary Account. |
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| Effect Of An Additional 1% p.a. Interest |
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| A 45-year-old with $60,000 in his combined CPF accounts will have about $17,900 more interest in 20 years’ time. | |
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The interest rate for the Ordinary Account will remain unchanged. Interest rate
for the SMRA (Special, Retirement and Medisave Accounts) will be pegged to a long term bond rate. |
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| Defer Your Draw-Down Age To Stretch Your Minimum Sum |
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Longer life expectancy means that you will need retirement income that can last you longer. To help Singaporeans accumulate more funds for retirement, the Minimum Sum Draw-Down Age (DDA) will be raised progressively from 62 in 2012
to reach 65 by 2018.
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Age As At 31 Dec 2007 |
New Draw-Down Age |
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56 to 57 |
63 |
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54 to 55 |
64 |
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53 and below |
65 |
Deferring the Draw-Down will allow your Minimum Sum to earn more interest while you continue to work. This will give you more income in retirement to last a longer time.
To help affected members cope with the increase in DDA, a one-off Deferment Bonus (D-Bonus) will be given. This will be paid into the members’ Retirement Account (RA). To encourage older members to voluntarily defer their DDA to age 65, a Voluntary Deferment Bonus (V-Bonus) will be given for each year of deferment.
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| Longevity Insurance To Provide Income For Life |
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The change in DDA will ensure that your Minimum Sum payout can last longer. However, about half of those who are alive at age 62 will live beyond 85.
A longevity insurance scheme will be introduced to ensure that you will have an income for life. A committee will study this and consult widely before introducing the scheme. |
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More details on the proposed CPF and other changes will be announced in the Ministerial Statement on 17 September 2007. |
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