SINGAPORE: Some lower- to middle-income Singaporeans aged 55 to 70 will get help from the Government to set aside the prevailing Basic Retirement Sum (BRS) in their Central Provident Fund (CPF) accounts, Deputy Prime Minister Heng Swee Keat announced in his Budget speech on Tuesday (Feb 18).
The Government will match every dollar of cash top-up made to the CPF Retirement Account of these members, up to an annual cap of S$600, from 2021 to 2025, said Mr Heng, who is also the Minister for Finance.
“This is a way of encouraging and augmenting family support for our seniors with fewer means in retirement,” he said. About 435,000 Singaporeans will be eligible for the initiative called the Matched Retirement Savings Scheme.
“Many Singaporeans want to top up their own, their spouse’s or parents’ CPF accounts,” Mr Heng said, adding that in 2019, such voluntary cash top-ups added up to about S$1 billion. “We would like to encourage more to do so, particularly those whose CPF balances are on the low side.”
BROADER ELIGIBILITY CRITERIA, HIGHER PAYOUTS UNDER SILVER SUPPORT SCHEME
Mr Heng also unveiled measures for a small segment of seniors, for whom CPF savings will not be enough. There will be a 20 per cent increase in the quarterly cash payouts for the elderly under the Silver Support Scheme, Mr Heng said.
For individuals living in smaller flats, this means that the cash payouts will increase from S$750 to S$900 per quarter, he said.
The scheme currently provides cash payouts to the bottom 20 per cent of Singaporeans aged 65 and above, with some support for those slightly above that. It was created almost five years ago.
“Some had low incomes during their working years, and currently have little or no family support,” he said.
Mr Heng said he will also broaden the eligibility criteria of the Silver Support scheme, to cover more seniors.
“I will expand the threshold for lifetime wages and per capita household income to cover more seniors,” Mr Heng said.
A new payout tier will also mean that seniors whose household incomes per person are above S$1,300 but not exceeding S$1,800 will be able to receive a payout. While it will be smaller than the payout in other tiers, this is the first time they will receive such a payout from the scheme.
Eligible seniors will be notified by the CPF Board and start receiving payouts under the enhanced scheme from December this year.
Overall, the Government expects about 100,000 more seniors to benefit from the enhanced Silver Support in 2021, Mr Heng said. The cost of Silver Support will nearly double, from today’s S$330 million, to around S$620 million in 2021.
Of the new measures, Mr Heng said: “These enhancements underscore the Government’s commitment to provide seniors with greater assurance in retirement, and reflect the values we hold dear, such as taking care of our parents and seniors.”
INCREASE IN BASIC RETIREMENT SUM
Mr Heng also announced an increase in the BRS by 3 per cent per year for the next two years. The BRS will be S$93,000 for cohorts turning 55 in 2021, and S$96,000 for cohorts turning 55 in 2022.
Mr Heng said that the BRS has increased by 3 per cent per year since 2017, while household incomes per capita have risen by an average of 4.1 per cent, in nominal terms.
“These modest continuing adjustments are necessary for the payouts to keep up with basic retirement expenses,” Mr Heng said.
Even with the adjustments, the Government expects seven in 10 actively employed persons from the 2021 and 2022 cohorts to be able to set aside their BRS, “significantly” more than the four in 10 a decade ago, Mr Heng said. He noted that with continuing wage growth, each successive cohort has been able to save more.
The Ministry of Finance said the BRS provides CPF members with monthly retirement payouts that cover basic living expenses. BRS adjustments generally account for long-term inflation and some improvements in standard of living, it added.
The ministry said the CPF withdrawal rules remain unchanged. For example, members can still withdraw up to S$5,000 unconditionally from the Ordinary Account or Special Account savings even if their Retirement Account savings are less than their cohort BRS from age 55.
Members are not required to top up their CPF accounts in cash or sell their property if they have less their BRS, it added.