Parliament: New matched retirement savings scheme can benefit low-income, gig workers, caregivers
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The Manpower Ministry will also continue to review its policies to improve the retirement adequacy of Singaporeans, Mrs Teo said, citing new enhancements to the Silver Support scheme which will benefit 100,000 more Singaporeans in 2021.
ST PHOTO: GIN TAY
Yuen Sin
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SINGAPORE - Older Singaporeans who earn less than $4,000 a month on average and have not met the Basic Retirement Sum (BRS) can tap a new matching scheme to boost their Central Provident Fund (CPF) savings from next year.
Manpower Minister Josephine Teo said the Matched Retirement Savings Scheme (MRSS), which will be introduced from 2021 to 2025, can benefit lower-income seniors, gig workers and caregivers.
About 435,000 Singaporeans will be eligible for the scheme every year, she said on Tuesday (March 3) during the debate on her ministry's budget.
The scheme involves the Government matching every dollar of cash top-up made to a person's CPF Retirement Account, up to an annual cap of $600.
To qualify for the scheme, which is for those aged 55 to 70 who have not managed to set aside the prevailing BRS, one must have an average monthly income of not more than $4,000, which covers a majority of senior workers.
The annual value of their residence must not exceed $13,000, which covers all HDB flats. They must also not own more than one property.
CPF members can receive lifelong monthly payouts that can cover basic living expenses from the time they turn 65, after setting aside a BRS at 55.
Those who make cash top-ups can enjoy up to $14,000 tax relief under the Retirement Sum Topping-Up Scheme.
There are no restrictions on who can contribute, said Mrs Teo.
"For example, employers may want to use MRSS as a staff benefit to recognise long-serving senior workers and help them set aside more for retirement... Working adults can also make top-ups to their stay-at-home spouses, or their parents who are nearing retirement."
Eligibility for the scheme is automatically assessed annually. Those who qualify will be notified by the CPF Board by the first quarter every year, starting from 2021, and there is no need to separately apply for the scheme.
Upon receiving a cash top-up, the matching grant for a given year will be automatically credited into the member's Retirement Account by the first quarter of the following year.
Nominated MP and labour economist Walter Theseira had also suggested improving the design of the MRSS scheme by asking people to commit to savings in advance, and out of future income.
For example, workers who receive government payouts such as the Workfare Income Supplement (WIS) could be asked if they would agree to contribute part or all of their future payouts to their CPF accounts to qualify for the match, he said.
MOM will study the suggestion, Mrs Teo replied.
The ministry will also continue to review its policies to improve the retirement adequacy of Singaporeans, Mrs Teo said, citing new enhancements to the Silver Support scheme which will benefit 100,000 more Singaporeans in 2021.
Ms Foo Mee Har (West Coast GRC) asked for an update on the CPF Lifetime Retirement Investment Scheme (LRIS), which had been recommended by the CPF Advisory Panel to the Government as a prudent, low-fee option for those who prefer a professionally guided manner to invest and grow their "surplus" CPF retirement savings more than three years ago.
Mrs Teo said it is a complex endeavour to meet the multiple objectives of the LRIS, which has to charge low fees, have a good chance of earning higher returns than the current CPF interest rates, and also provide some assurance against downside risks.
"Given the many issues that demand MOM's attention, I seek members' understanding that we need more time to get the fundamentals right," said Mrs Teo, adding that the Government will provide an update when ready.
Responding to Non-Constituency MP Daniel Goh on whether higher Central Provident Fund (CPF) contribution rates for older workers would still kick in next year and if the pace of the increase could be accelerated, Mrs Teo said the first increase in CPF contribution rates will take effect Jan 1 next year but the next steps have yet to be decided.
While the Government would ideally like to accelerate the increase in CPF contribution rates, this desire needs to be balanced against the impact on the senior workers' employability and take-home pay, she added.
