Martin Lee @ Sg
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Increase in CPF Minimum Sum, Medisave Minimum Sum and Medisave Contribution Ceiling from 1 July 2013

CPF members who turn 55 between 1 July 2013 and 30 June 2014 will need to set aside a higher Minimum Sum (MS) of $148,000 in their Retirement Account (RA). The MS for 2012 was $139,000.

The CPF Minimum Sum actually stood at $80,000 in Jun 2004. The original plan was to increase it to $120,000 over a period of ten years from 2004. This works out to about $4000 a year. However, an inflation factor was also applied to the increase, so the actual increase over the years looks like this:

Until 30 Jun 2004 – $80,000
1 Jul 2004 – $84,000 ($84,500 – after inflation adjustment)
1 Jul 2005 – $88,000 ($90,000 – after inflation adjustment)
1 Jul 2006 – $92,000 ($94,600 – after inflation adjustment)
1 Jul 2007 – $96,000 ($99,600 – after inflation adjustment)
1 Jul 2008 – $100,000 ($106,000 – after inflation adjustment)
1 Jul 2009 – $104,000 ($117,000 – after inflation adjustment)
1 Jul 2010 – $108,000 ($123,000 – after inflation adjustment)
1 Jul 2011 – $112,000 ($131,000 – after inflation adjustment)
1 Jul 2012 – $113,000 ($139,000 – after inflation adjustment)
1 Jul 2013 – original target not provided ($148,000 – after inflation adjustment)
2 more increase to come, for 2014 and 2015

Medisave Minimum Sum and Medisave Contribution Ceiling

The Medisave Minimum Sum (MMS) is the amount that a person turning 55 needs to set aside in his old age for his own or his dependants’ healthcare expenses and basic MediShield and ElderShield premiums.

From 1 July 2013,

  1. The Medisave Minimum Sum (MMS) will be raised to $40,500 from $38,500. Members will be able to withdraw their Medisave savings in excess of the MMS at or after age 55.
  2. The maximum balance a member may have in his Medisave Account, known as the Medisave Contribution Ceiling (MCC), is set at $5,000 above MMS and this would be increased correspondingly to $45,500, from $43,500.

Any Medisave contribution in excess of the current MCC will be transferred to the member’s Special Account if he is below age 55 or to his RA if he is above age 55 and has a MS shortfall.

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2 comments
Lim OS says 6 years ago

Dear Martin,

Is this really the way forward? i am really worried that a lot of people will not be able to meet the minimum sum requirement when they actually reach the age of 55. This is obviously due to,

1. Expensive residential property.

2. Insufficient cpf contribution.

A lot of people who had bought properties during the past 5 years will need to service their loans in cash after exhausting their cpf monies (due to minimum sum and bla…bla…restriction), that’s provided that they have sufficient saving in their personal account.

i believe there are also a substantial number of singaporean who are further burden financially by sky rocket car prices and worst for those who indulge in regular vacations overseas.

what do you think,

1. The government should do to ensure that singapore resident have sufficient fund for retirement.

2. singapore resident should do if the cost of owning a property and car do not come down.

regards,

OSLIM

Reply
    Martin Lee says 6 years ago

    Dear Oslim,

    Having not enough minimum sum can be a problem, if all the money is tied up into one residential property and there are no separate savings for retirement.

    It doesn’t really help even if you can use the property to pledge against the minimum sum, but have no monthly income stream from CPF.

    The liberalization of allowing CPF to be used for housing has resulted in higher property prices and insufficient money in the CPF account.

    This will be something difficult for the policy makers to undo, but one way they are subtlety doing it is by reducing the maximum amount of CPF that can be used for housing. This will take time.

    What should one do? Spend prudently and save more. Live within your means. Make use of schemes like SRS to get extra benefits.

    Reply
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