SINGAPORE - Those who turn 55 from July 1 next year must set aside $161,000 in their Central Provident Fund accounts, up from the $155,000 Minimum Sum for this year's cohort. But after that, there will be no more major increases in the Minimum Sum, said Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday night.
The Minimum Sum has been gradually raised since 2003 because the old figure of $80,000 then was "too low", said Mr Lee yesterday. But next year marks the final instalment of these increases.
The new quantum of $161,100 is the equivalent of $120,000 in 2003 dollars - the Government's target for the Minimum Sum. CPF members who pledge their property need only set aside half of this in cash, or $80,500.
"Beyond that, I do not see a need for any more major increases in the Minimum Sum," said Mr Lee. But he added that it will still need to be adjusted from time to time, to keep pace with rising incomes and spending needs, and to provide for a longer retirement as longevity increases.
Mr Lee also sought to address unhappiness over the Minimum Sum scheme by explaining how this amount was "far from excessive" and might even be insufficient, depending on how much one wishes to have each month during retirement.
Playing 'financial planner' to a hypothetical Mr and Mrs Tan, aged 54, with a monthly income of $4,500, he asked the audience how much this couple would need in retirement.
If they want $2,000 a month, they would need to set aside $250,000 in CPF - more than the $155,000 Minimum Sum for their cohort.
If Mr and Mrs Tan pledge their property, then they will need to set aside less in cash: just half the Minimum Sum, or $77,500. But this will give them a monthly CPF payout of just $600 a month.
If they need more than that each month, then they cannot depend on CPF alone, concluded Mr Lee. They must find other sources of income, such as working, depending on their children, drawing on their personal savings, or monetising their flat.