Debated in Parliament on 6 Mar 2025.
Mr Neil Parekh Nimil Rajnikant asked the Minister for Manpower (a) what is the Ministry's assessment of Singaporeans' current preparedness for retiring gracefully and with dignity; (b) whether the Government can consider using recent Budget surpluses to provide a one-time top-up of $24,000 to the CPF Retirement Account (RA) for Singaporeans aged 55 years and above and to do the same for all reaching that age in future; and (c) whether the Government has looked at ways to increase the annual interest rate on RA to 6%.
Over the last decade, the proportion of active Central Provident Fund (CPF) members who have set aside their cohort Basic Retirement Sum (BRS), at age 55, has improved from about five in 10 to more than seven in 10 today. We expect this number to increase to about eight in 10 in 2027.
The improvement in the BRS attainment rate for CPF members is the result of many years of enhancements to the CPF system and our aim is to assure Singaporeans that as long as they work and contribute consistently to CPF, they will be able to meet their basic retirement needs. We recently made significant moves through the Forward Singapore exercise to strengthen support for retirement adequacy. From 2025, we have enhanced the Workfare Income Supplement scheme, the Matched Retirement Savings Scheme and the Silver Support Scheme.
For members who need more help, the Government provides targeted support for their retirement needs. For example, we introduced the $9 billion Majulah Package in 2024 to provide Singapore Citizens born in 1973 or earlier with an additional boost for their retirement and healthcare savings. This included the Retirement Savings Bonus of up to $1,500, which was given to about 800,000 eligible seniors' CPF accounts in December 2024.
CPF interest rates are pegged to returns of investments of comparable risk and duration in the market, with floor rates of 2.5% for the Ordinary Account and 4% for the Special, MediSave and Retirement Accounts, to protect members from any downside risks. When interest rates were low, the Government continued to pay the floor rates; and when the pegged rates exceeded the floor rates, members have correspondingly earned the higher interest rates.
For members aged 55 and above, the Government currently pays 6% interest on the first $30,000 and 5% on the next $30,000 of combined CPF balances to help boost their retirement savings. Members who wish to take on some risks for potentially higher returns may also choose to invest their savings under the CPF Investment Scheme.
We will regularly review our CPF policies as part of our ongoing efforts to strengthen the retirement adequacy of Singaporeans, to ensure that Singaporeans can continue to build up their retirement savings, with the Government providing targeted support especially to those who need it.
PAPERCUTS