Common questions (and answers!) on the latest CPF changes: Part 1

In the first of a three-part series, Straits Times correspondent Joanna Seow looks at questions about how the changes affect the savings in your Retirement Account.

What is the Basic Retirement Sum and how is it calculated?

To provide a monthly payout of about $650 to $700, the Basic Retirement Sum of $80,500 should be set aside in your Retirement Account if you are turning 55 next year.

This is based on expected expenditure needs in 10 years’ time for retirees with spending in the lower-middle range. It assumes you own a home and do not pay rent. 

How much will the Basic Retirement Sum go up by?

Three per cent each year from 2017 to 2020. As a gauge, Minimum Sum increases between July 2013 and July 2015 range from 3.9 per cent to 10.4 per cent. 

Why does the Basic Retirement Sum rise?

To keep pace with inflation and allow for rising standards of living. The lower-middle range of retiree household expenditure grew about 5 per cent yearly, compounded over the 10 years to 2013.

The rise also takes into account historical inflation rates – the 20-year average core inflation is about 1.7 per cent. 

How do I know which cohort I belong to for the Basic Retirement Sum?

The sum will apply to people turning 55 in a calendar year. This is a change from the current system which groups people born from July 1 of each year till June 30 the following year into one cohort. 

What happens to the money in my Retirement Account?

The savings are invested in special Singapore Government Securities that pay fixed interest rates over a long period of time. They are used as a premium to buy an annuity, under the CPF Life scheme. 

What is an annuity?

A financial product that grows your funds and then gives you regular payouts 

How much money can I set aside for CPF Life?

Anywhere between $40,000 and $241,500 at 55, depending on how much you want to receive in monthly payouts. If you set aside the minimum of $40,000, you will receive an estimated monthly payout of $360.

The CPF Advisory Panel has three recommended levels for those turning 55 next year:

Basic Retirement Sum of $80,500 for monthly payouts of $650 to $700;

Full Retirement Sum of $161,000 for monthly payouts of $1,200 to $1,300;

Enhanced Retirement Sum of $241,500 for monthly payouts of $1,750 to $1,900. 

Read Part 2 of this series on CPF changes to find out what are the common questions on how the changes affect the payouts you can receive in your later years. 

Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission

One less thing to worry about

Subscribe to us for regular news updates, insights and tips on insurance, offers on products and services that’ll give you greater financial confidence.

Thank you for your submission. 

Please enable javascript on your internet browser in order to use this form

By clicking “Submit”, you consent to Aviva and Aviva related companies contacting you to provide you with information concerning Aviva and Aviva related companies’ products and services and special offers which may be of interest to you. For details of Aviva’s Data Protection Policy, please refer to To withdraw your consent at any time, please call Aviva at +65 6827 7988. 

Important Information

Money Banter (the "Portal") is for general information only and does not take into account the specific investment objectives, financial situation, health condition and needs of any particular person. The contents of this Portal are intended merely for educational purposes and should not be construed as the giving of advice or the making of a recommendation. Nothing contained in this Portal shall constitute a distribution, an offer to sell or the solicitation of an offer to buy. We recommend that you discuss any specific matters with your financial adviser representative or legal adviser before making any decision. You are responsible for your own medical care, treatment and oversight, and any health-related content on this Portal, including, text, treatments, dosages, outcomes, charts, profiles, graphics, images, messages and forum postings are strictly information to promote general understanding of certain health topics only, do not constitute the providing of medical advice, and should not be relied upon as a substitute for professional medical advice, diagnosis or treatment. Always seek advice from a physician or other qualified health care provider regarding your medical condition or treatment and before undertaking a new health care regimen. This Portal may include information sourced from third parties and links to third party websites. We are not responsible for the accuracy or completeness of, and do not recommend or endorse such information or third party websites nor recommend or endorse any specific tests, physicians, products, procedures, opinions or other information. While we have taken reasonable care to ensure that the information on this Portal has been obtained from reliable sources and is correct at time of publishing, information may become outdated and opinions may change. Except to the extent prohibited by any law, we are not liable for any loss (including direct, indirect and consequential loss, loss of profits, loss or corruption of data or economic loss of any kind) that may result from the access or use of or reliance on the information on this Portal.  | Terms of Use | Privacy Policy

Protected up to specified limits by SDIC. This advertisement has not been reviewed by the Monetary Authority of Singapore.