Enhancing Support for Seniors and Strengthening Retirement Savings
In line with efforts to bolster Singapore’s retirement system, the government has announced a series of changes aimed at improving the financial security of seniors. Among the key measures introduced in the 2024 Budget, CPF (Central Provident Fund) contribution rates for individuals aged 55 to 65 will be raised by 1.5 percentage points starting in 2025.
Currently, the contribution rate for those aged 55 to 60 is 31% of their monthly wages, while those aged 60 to 65 contribute 22%. With the increase, these rates will be adjusted to better support workers as they prepare for retirement. To ease the financial burden on employers, the CPF Transition Offset, which was implemented last year, will be extended for an additional year. This offset will help employers cover half of the increased CPF contributions for their employees.
Alongside these changes, the Enhanced Retirement Sum (ERS) will be raised to four times the Basic Retirement Sum (currently three times), starting from 2025. This change will see the ERS set at S$426,000, enabling more CPF members aged 55 and above to receive higher payouts from their CPF savings if they choose.
In another significant move, the government will close the Special Account (SA) for CPF members aged 55 and above. Savings in the SA will be transferred to the Retirement Account (RA) up to the Full Retirement Sum, ensuring that seniors continue to benefit from the long-term interest rate that applies to the RA. Any remaining savings in the SA will be moved to the Ordinary Account (OA), which offers a lower interest rate.
In addition to these adjustments to the CPF system, the Silver Support Scheme, which provides financial assistance to seniors, will be enhanced. The qualifying income threshold for the scheme will be raised to S$2,300 per capita household income (from the previous S$1,800), making more seniors eligible. Additionally, the quarterly payments under the scheme will be increased by 20%, providing increased financial relief to those in need.
Furthermore, the Matched Retirement Savings Scheme (MRSS), which aims to encourage seniors aged 55 to 70 with lower CPF savings to increase their savings, will be extended to individuals aged 70 and above. The annual matching cap for the scheme will also be raised to S$2,000, up from S$600, with a lifetime matching cap of S$20,000.
However, in a shift, the government has announced that the tax relief for cash top-ups to CPF accounts, which currently attracts matching grants under the MRSS, will be removed. Despite this change, the overall aim remains to strengthen Singapore’s retirement savings system and provide enhanced support for seniors. These moves demonstrate the government’s commitment to
