Trying to understand all the acronyms that the CPF board in Singapore likes to throw at us can feel like juggling 10 balls while riding a unicycle (i.e. impossible). But understanding the importance of these CPF terms is going to turn you into a retirement pro. Fine, it might not give you bragging rights with your friends but you can...
PHOTO: The Straits Times fileTrying to understand all the acronyms that the CPF board in Singapore likes to throw at us can feel like juggling 10 balls while riding a unicycle .
So, here's a breakdown-an Ultimate Shiok Dummies Guide, if you will-of everything CPF-related in Singapore.Before we get into the weeds, we need to settle down and get the foundations right first. That means understanding what CPF actually is. Your funds in here get turned into a Retirement Account upon reaching 55 and you can't withdraw any CPF SA funds before you reach the retirement age.The CPF MediSave Account is for — you guessed it! — medical expenses as well as future medical expenses in retirement.
There are three levels of payouts that you can get, determined by how much you're willing to dish out in premiums.Steady Plan: This is a standard monthly payout and they won't grow every yearCPF schemesWhile you may be chanting "Majulah Singapore!" with gusto at the NDP, the Majulah Package is more likely to get only older Singaporeans excited about their retirement savings.
The WIS is a scheme that helps top up the salaries of lower-income workers to help them meet save sufficiently for retirement. Not all of this goes to CPF, with around 40 per cent allocated in cash while the remaining 60 per cent goes towards CPF contributions.Think of MediShield Life as your basic health insurance plan. It's administered by the CPF Board and helps you pay for those large hospital bills and select pricey outpatient treatments, like kidney dialysis or chemotherapy for cancer.
This is an extra layer of private insurance coverage that has a higher allowance for stays at private hospitals or Class B1/A wards in public hospitals. Currently, the BHS in 2024 is set at S$71,500 and it's adjusted yearly to account for longer life expectancy and higher healthcare costs.Ok, so you're actually bringing in CPF money — that's great! But where is it coming from? Well, 17 per cent of it comes from your employer up to you working until you're 55 years old.
In fact, the wage ceiling means anything earned beyond a certain amount per month isn't contributed towards CPF. And finally, the third tier is if you're a property owner with a lease that lasts up to at least age 95 then you can set aside your FRS with a mixture of property and cash, and withdraw part of your CPF RA savings.When we turn 55, we get given a CPF Retirement Account and this is where our CPF OA and CPF SA savings are transferred to.
Luckily for us, the CPF Board makes it easy. There are a couple of requirements though. You have to have minimum balances of S$20,000 in your CPF OA and S$40,000 in your CPF SA as well as completing a CPFIS Self-Awareness Questionnaire !
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