Central Provident Fund

In Singapore the Central Provident Fund (Abbreviation: CPF; Chinese: 公积金, Pinyin: Gōngjījīn) is a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, and housing needs. It is administered by the Central Provident Fund Board, a statutory board under the Ministry of Manpower. The employer has to contribute 16% of the employee's monthly gross salary while the employee contributes 20% of his monthly gross salary. The CPF was started on 1 July 1955.

History of CPF


The British colonial authority in Singapore introduced the CPF in 1955 as a compulsory savings scheme so as to allow workers to save for their retirement, 10 years after the end of the Japanese Occupation when people were struggling to make ends meet.

With Singapore's entrance into developed status, life expectancy rose with the rising living standards. Singaporeans were required from 1987 to set aside a portion of their income to their CPF until the age of 55 to provide them with a basic monthly income when they retire.

CPF Logo
The circle emphasises the completeness of the CPF system as a national social security savings scheme.

The shield represents security and protection from the members in their retirement.

The three keys represent the unity of the tripartite relationship among Employees, Employers and the Government.

Lastly, the use of the colour green in the logo highlights the need for CPF’s constant growth and dynamism.

Accounts and Interest Rates
Working Singaporeans and their employers make monthly contributions to the CPF and these contributions go into four accounts:
 * Ordinary Account(OA) – for housing, pay for CPF insurance, investment and education.
 * Special Account(SA) – for old age and investment in retirement-related financial products.
 * Medisave Account(MA) – for hospitalisation and approved medical insurance.
 * Retirement Account(RA) - created when one turns 55 using the savings in OA and SA. It is set up to meet basic needs during old age.

The CPF savings earn a minimum risk-free interest of 2.5% guaranteed by the Government. Till December 2013, Special, Medisave and Retirement Account savings earned a guaranteed minimum 4% interest. In addition, the first $60,000 in the combined CPF balances, with up to $20,000 from the Ordinary Account, earned an extra 1% interest.

Employer and employee CPF contribution rates
When the CPF was started in 1955, both employees and employers contributed 5% each. Over the years, the rate was increased until it reached 25% in 1985 for both parties. The principle of equal contribution was abandoned in 1986 due to a sharp recession. While the share of employees remained at 25%, employers only had to contribute 10%. Afterwards, the rate of employers was again raised to be equal until the 1997-1998 Asian Financial Crisis when the rate for employers was again lowered to 10% for those 55 years or younger. Since then, economic problems have been blamed for postponing the reinstatement of the original balance.

In September 2010, the employer's contribution to the CPF, a national pension fund, went up by 0.5% and added into the Medisave Account.

In March 2011, the employer's contribution went up another 0.5% and this would be added into the Special Account, bringing the total employer CPF contribution to 15.5%. This will set the overall contribution employer and employee CPF contribution rate to 35.5%.

From 1 September 2011, the employers’ CPF contribution rate is increased by 0.5 percentage point. For employees who are above 35 years old and earning monthly wages of up to $1,500, the higher employer CPF contribution rate will continue to be phased in from 0% at the wage of $50 to the new full rate at the wage of $1,500. The increased contribution will be credited to the employees’ Special Account (including those above 55 years of age).

However, the additional 0.5 percentage point does not apply to graduated employer and employee rates for first or second year Singapore Permanent Residents (SPR) and their employers.

From September 2012, CPF contribution rates for older workers aged 50 to 65 was increased to help them better prepare for retirement. For employees aged between 50 and 55, their contribution rates will go up by 2.5 percentage points – 2 percentage points from the employer and 0.5 percentage points from the employee – to bring their total CPF contributions up to 32.5% from 30%. For those between 55 and 60, their contribution rates will go up by 2 percentage points – 1.5 percentage points from the employer and 0.5 percentage points from the employee.For workers between 60 and 65, their employer contribution rate will increase by 0.5 percentage points, with no increase in their employee contribution rate.

Schemes and Services
The overall schemes and services of the CPF encompass the following:

Retirement Savings and Withdrawals
CPF Minimum Sum

The CPF Minimum Sum (MS) Scheme provides members with a monthly income to support a modest standard of living during retirement. For members who are unable to set aside the full MS in cash, their property bought with their CPF savings will be automatically pledged to make up up to half of their MS.

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

The MS has been adjusted over the years to account for inflation, longer life expectancies and Singaporeans rising expectations of their quality of life post-retirement. The MS is targeted to reach $120,000 (2003$1) in 2015.

Reaching 55

Upon reaching 55, members may withdraw a portion of their CPF savings based on their available CPF balances. Setting aside the MS upon reaching 55 ensures that members have some regular income from their Draw Down Age to live on during retirement.

At 55

At age 55, the CPF savings may be withdrawn after setting aside the CPF minimum sum. Members may also join CPF LIFE or buy approved life annuities with their MS to give them a guaranteed income for life. Alternatively, they may continue to keep their MS with the CPF Board to earn 4% interest per annum currently. The interest rate is revised yearly.

From 65

Monthly payments shall commence from one's draw down age and given from the CPF Minimum Sum to help meet basic needs in retirement. If life annuity had been purchased, a monthly income for life shall be given. If the CPF minimum sum is left with a participating bank or with CPF Board, monthly income shall be given till the CPF minimum sum is exhausted.

Refer to the table below for the applicable draw down age If you reached 55 before 1 January 1999, your Draw Down Age is 60.

Monthly payouts may be started later; it is beneficial in that way since payouts will last longer. For example, if the payouts were started at age 63 instead of 62, they can last till age 84 instead of 82.

Withdrawal at age 55

For withdrawal of CPF savings, the following rules apply for those who reach 55 between 1 January 2012 and 30 June 2012:

Note: If you have at least $40,000 in your Retirement Account at age 55, you will be automatically placed on CPF LIFE

(*)The Retirement Account is created when a member reaches 55.

(**)The CPF Minimum Sum applicable for members turning 55 between 1 July 2011 and 30 June 2012 is $131,000. The Board will announce the CPF Minimum Sum figure (adjusted for inflation) in May each year.

From 1 January 2012, for members reaching 55 who have set aside the CPF Minimum Sum in their Retirement Account, if the prevailing Medisave Required Amount is met: they can withdraw all the balances in their CPF Ordinary (OA) and Special Accounts (SA), and any balance above the Medisave Minimum Sum in their Medisave Account (MA).

CPF LIFE

The CPF Lifelong Income scheme for the Elderly (CPF LIFE) is a scheme that will provide with a monthly payout starting from your Draw Down Age (DDA), for as long as you live. It improves upon the current Minimum Sum Scheme where payouts only last about 20 years. No minimum amount of RA savings will be needed to join CPF LIFE, however the monthly payout depends on the RA savings. Thus, members with lower RA balances will receive correspondingly lower monthly payouts.

For members who turn 55 before 2013, he can join CPF LIFE if he is a Singapore Citizen or Singapore Permanent Resident between the ages of 55 and 80 with savings in your Retirement Account (RA).

For members who turn 55 after 2013, he would be automatically included in CPF LIFE if he had at least $40,000 in his RA when he turns 55 or at least $60,000 upon reaching 65. Members can still choose to join the scheme if he is not automatically included. Members who have a life annuity from an insurance company that provides equivalent benefits to that of CPF LIFE may be exempted from joining the scheme.

CPF Withdrawals on Other Ground

The CPF savings can also be withdrawn on the following grounds:
 * By Malaysians, who had CPF accounts and residing in West Malaysia
 * One has given up his citizenship or PR and leaving Singapore and West Malaysia permanently
 * Permanently unfit for work, such as physically or mentally incapacitated - may not be a full withdrawal of savings, subjected to terms and conditions
 * Death

Healthcare
Monthly contributions to the Medisave account help build up savings for healthcare needs. Medisave may be used to cover for self or dependents hospitalisation expenses. It may also be used for certain outpatient treatments like chemotherapy and radiotherapy treatments.

Medisave savings may be used to cover the premiums for MediShield. These are catastrophic medical insurance schemes for one and one's dependents. They help to meet the high medical costs of prolonged or serious illnesses. For older CPF members, there is ElderShield, an affordable severe disability insurance scheme that provides insurance coverage to those who require long-term care.

To ensure that all Singaporeans have access to medical care, Medifund helps the poor and needy to cover their medical bills.

The Medisave Required Amount is set at $38,500 from 1 January 2013.

Since 1 January 2004, CPF members who turn 55 and are able to meet the CPF Minimum Sum are required to set aside the MRA in their Medisave Account when they make a CPF withdrawal. If such members have less than the MRA in their Medisave Accounts, their Ordinary and/or Special Account balances in excess of the Minimum Sum will be used to top up the MRA

If you wish to withdraw your Medisave at 55, you need to set aside the Medisave Minimum Sum (MMS) before you are allowed to withdraw the excess. The MMS from 1 July 2012 is $38,500 and it would be increased to $40,500 from 1 July 2013.

The MMS is adjusted every July for inflation in healthcare costs so that its value in future years will be the same as that in 2003. This is because the value of money will fall as prices in general go up over time. It is therefore important that the MMS preserves its value to help members meet their healthcare needs in old age.

The revisions to MMS and MCC are to ensure that Singaporeans have sufficient savings to meet their healthcare expenses, and have been adjusted for inflation.

Home ownership
The Ordinary Account savings can be used to purchase a home under the CPF housing schemes. A Housing and Development Board (HDB) flat may be purchased under the Public Housing Scheme, or a private property under the Residential Properties Scheme. CPF savings may be used for full or partial payment of the property, and to service the monthly housing payments. Home buyers who are taking a bank loan to finance their property purchase have to pay the first 5% of the downpayment in cash. If a flat is purchased under the Public Housing Scheme, insurance under the Home Protection Scheme will be needed.

How much CPF can be used?

a) A new HDB flat bought directly from HDB (financed by HDB concessionary loan)

One can use the full CPF Ordinary Account savings and future CPF contributions in the Ordinary Account for the downpayment as well as the balance of the purchase price and/or pay off the HDB loan.

b) A resale HDB flat bought in the open market (financed by concessionary loan)

One can use the full CPF Ordinary Account savings and future CPF contributions in the Ordinary Account for the downpayment as well as the balance of the purchase price and/or pay off the HDB loan.

When the total amount of CPF used for the particular property has reached 100% of the Valuation Limit (VL), one has to have Ordinary and Special Account savings of at least 50% of the prevailing CPF Minimum Sum when using further Ordinary Account savings for the property. The VL is the lower of the purchase price or the value of the property at the time of purchase.

c) HDB flat or private property financed by bank loan

The same as (b) above except that when the total amount of CPF used has reached the CPF Withdrawal Limit, further use of CPF is not allowed for the property.

Click here for more information on Public Housing Scheme and click here for more information on residential properties.

Family Protection
The Dependents' Protection Scheme helps families to tide over the first few years in the event of an insured member's permanent incapacity or death.

The Home Protection Scheme prevents homes from being lost. This scheme is applicable to all CPF members who use their CPF savings to buy an HDB flat. Should the insured member become permanently incapacitated or die, the CPF Board will pay the outstanding housing loan based on the amount insured.

MediShield is a catastrophic medical insurance scheme to help one and their dependents to meet the high medical costs of prolonged or serious illnesses. For older CPF members, there is ElderShield, an affordable severe disability insurance scheme that provides insurance coverage to those who require long-term care.

Asset enhancement
CPF members may invest their Ordinary Account balance under the CPF Investment Scheme – Ordinary Account (CPFIS-OA) and their Special Account balance under the CPF Investment Scheme – Special Account (CPFIS-SA), subject to caps. Assets that may be invested includes Insurance, unit trusts, Exchange Traded Funds (ETFs), Fixed Deposits, Bonds and Treasury Bills, Shares, Property Fund and Gold. From 1 July 2010, only monies in excess of $20,000 in the Ordinary Account and $40,000 in the Special Account can be invested.

Similar systems elsewhere

 * National Insurance (UK)
 * Social Security in France
 * South African Social Security Agency
 * Social Security (United States)
 * Social Security (Sweden)
 * Social Security (Australia)
 * National Social Security System (Sistem Jaminan Sosial Nasional)(Indonesia)