Singapore’s CPF system underwent a significant change with the closure of Special Accounts for members aged 55 and above, effective January 19, 2025. Announced during Budget 2024, this move aims to streamline retirement savings and optimize the financial support available to seniors. Here’s everything you need to know about the changes, their implications, and how members can make the most of the updated system.
Key Changes to CPF Special Accounts
1. Closure of Special Accounts
The Special Accounts of 1.4 million CPF members aged 55 and above were officially closed on January 19, 2025. Savings from these accounts were transferred to either:
- Retirement Accounts: Up to the Full Retirement Sum.
- Ordinary Accounts: For any remaining funds.
Members will continue to earn interest rates of 4% per annum on Retirement Account savings and 2.5% per annum on Ordinary Account savings.
2. Enhanced Retirement Sum
From January 1, 2025, the Enhanced Retirement Sum (ERS) increased to S$426,000, offering higher monthly payouts for those who top up their Retirement Accounts.
- Members turning 55 in 2025 can receive CPF LIFE payouts of up to S$3,300 per month starting at age 65 by topping up to the ERS.
3. Matched Retirement Savings Scheme Enhancements
The Matched Retirement Savings Scheme was enhanced to support members with lower retirement savings. Changes include:
- Removal of the age cap of 70 years.
- Increased matching grants from S$600 to S$2,000 per year, capped at S$20,000 over a lifetime.
Why Was the Special Account Closed?
According to the Ministry of Finance, the closure addresses an “anomaly” where withdrawable funds in Special Accounts earned long-term interest rates of 4%. This adjustment aligns the system with standard financial principles:
- Withdrawable savings earn short-term interest rates (e.g., 2.5% for Ordinary Accounts).
- Locked-in savings earn higher, long-term rates (e.g., 4% for Retirement Accounts).
Economists and financial experts have noted that this policy enhances equity while removing loopholes that benefited only a small segment of the population.
Implications for CPF Members
Higher Retirement Payouts
Members can transfer Ordinary Account savings to their Retirement Accounts up to the Enhanced Retirement Sum to enjoy higher interest rates and boost future payouts.
Investment Considerations
For members who invest Special Account savings, proceeds will now be deposited into either the Retirement Account or Ordinary Account, depending on the Full Retirement Sum status.
Savings Strategy Recalibration
With the closure of Special Accounts, members are encouraged to review their saving and withdrawal strategies to maximize retirement benefits.
Tips for Members Aged 55 and Above
- Maximize Interest with Top-Ups
- Consider topping up your Retirement Account to the Enhanced Retirement Sum. This move is irreversible but offers higher interest and larger payouts.
- Avoid Scams
- Be vigilant against scammers posing as CPF officials. Verify any correspondence through the official CPF website or mobile app.
- Leverage Matching Grants
- If eligible, make cash top-ups under the Matched Retirement Savings Scheme to benefit from the enhanced S$2,000 matching grant.
- Utilize CPF Tools
- Use the CPF dashboard to estimate monthly payouts and check eligibility for schemes like the Matched Retirement Savings Scheme.
Future Changes to Look Out For
- Adjustments to the Basic, Full, and Enhanced Retirement Sums from 2025 to 2027.
- Expanded tools and resources on the CPF website and mobile app to support retirement planning.
