Minimum Sum scheme

At 55, the Retirement Account is created and monies from the Ordinary and Special Accounts are transferred to form the Retirement Sum, from which monthly payouts are drawn. The Basic Retirement Sum (BRS) is set based on the lower-middle retiree household expenditure per person according to the Household Expenditure Survey. It is set at $88,000 in 2019 and assumes that the member owns a property.

Those who do not own a property might need to pay rent and will therefore need to set aside more in their retirement sum. The Full Retirement Sum, which is twice the amount of the BRS, caters for such expenses. To receive even higher payouts, members can opt for the Enhanced Retirement Sum, which is three times the BRS.

However, payouts do not double or triple proportionally with retirement sums because of the different interest rates earned across CPF balances. The first $30,000 earns 6 per cent per annum, the next $30,000 earns 5 per cent, and balances above $60,000 earns 4 per cent.

The retirement sum has been increasing steadily over the years because of inflation, longer life expectancy and increasing standard of living. The table shows the rise in retirement sums from 2016 to 2020.

SOURCE: CPF BOARD