SINGAPORE - Amid the uncertainties of the Covid-19 pandemic last year, 140,000 Central Provident Fund (CPF) members - 36 per cent more than the year before - made account top-ups under the Retirement Sum Topping-Up Scheme.

They put in a total of $3 billion in top-ups to their or their loved-ones' accounts, 40 per cent more than the amount of top-ups made in 2019, said the CPF Board on Wednesday (Feb 3). The Board added that $1.2 billion of top-ups were made in the fourth quarter of last year alone.

Experts said the increase was probably spurred by rising awareness of the benefits of using CPF to save.

"Given the current low interest rate environment, and with more awareness and education around the use of CPF funds and how it offers members more attractive risk-adjusted returns compared with regular savings accounts and even some investments, it is not surprising to see a higher take-up rate for top-ups, especially given the uncertainties caused by Covid-19," said OCBC Bank's head of wealth advisory Kelvin Goh.

The number of people topping up for the first time rose last year, especially among the younger set.

More than one in three of those who made top-ups last year were first-timers, which is an increase of more than 50 per cent compared with the previous year, said the CPF Board in a media release.

Among young people below 35 years old, there were 86 per cent more who topped up for the first time last year, compared with the previous year. This group saw the highest increase in first-timers.

Compared with 2019, 27 per cent more people topped up their parents' CPF accounts last year.

The Retirement Sum Topping-Up Scheme allows members to use cash or existing CPF savings to top up their own or their loved ones' accounts.

For recipients below the age of 55, the Special Account can be topped up to the current Full Retirement Sum, which is $186,000 this year.

Retirement Accounts of those aged 55 and above can be topped up to the current Enhanced Retirement Sum, which is $279,000 this year.

CPF members get tax reliefs of up to $7,000 per calendar year, equivalent to the cash top-ups made to their own accounts, and up to another $7,000 for top-ups for their parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings.

Mrs Tan Chui Leng, CPF Board's group director of the retirement income group, said that more members, especially young adults, are realising that topping up their CPF accounts is a key part of their retirement plan.

"As a parent myself, I am glad to see that children too are helping their parents boost their retirement savings by topping up for them," she said.

She added that by topping up in January each year rather than in December of that year, CPF members can earn 20 per cent more interest on their CPF savings in just 10 years.

This is because CPF interest is computed monthly, said a spokesman from the Board.

DBS Bank's head of financial planning literacy Lorna Tan said the trend of top-ups is expected to continue, especially with the start of the Matched Retirement Savings Scheme this year.

Under the scheme, each dollar of cash top-up to an eligible person's Retirement Account will be matched by the Government for the next five years, capped at $600 per year.

"CPF savings form the foundation of one's retirement plan," added Ms Tan.

"For young people, their longer time horizon presents an excellent opportunity to grow their nest egg, thanks to the power of compounding."

One of those who topped up his account last year is Mr Cuthbert Yeo, 29.

The circuit breaker period gave him more time to look into his finances, and the engineer decided to better utilise his CPF accounts.

He voluntarily refunded the amount he had used from his Ordinary Account for his share of the down payment on his Housing Board flat, and transferred money from his Ordinary Account, which has a base interest rate of 2.5 per cent per year, to his Special Account, which has a base interest rate of 4 per cent per year.

He had started moving cash to his Special Account from 2018, after reading a CPF Board annual report where a chart showed that many people in his age group had more in CPF savings than he did.

At the time, Mr Yeo was two years into his first job, also in the engineering field.

He then started topping up his CPF Special Account whenever he received a bonus from his employer.

Since then, he has put in about $40,000 in both cash and transfers from his Ordinary Account.

"We should really build up a base of retirement savings while we're still young, especially now that the job market is not as stable with innovative disruption and it's not guaranteed that we can get a job we might want when we're older," he said.