A new Matched Retirement Savings Scheme will be introduced to help those with less Central Provident Fund (CPF) savings.
About 435,000 lower-to middle-income Singaporeans aged 55 to 70, who have not been able to set aside the prevailing Basic Retirement Sum (BRS), will be eligible for the scheme, which will take effect from next year to 2025.
It 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.
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.
"This is a way of encouraging and augmenting family support for our seniors with fewer means in retirement," said Finance Minister Heng Swee Keat.
Having financial assurance in retirement can help Singaporeans age with confidence, he added, given that Singapore's life expectancy at birth is close to 85 years, the longest in the world.
"We need to keep on updating and improving our CPF policies over time, so that they remain appropriate for each cohort," he said, noting that other pillars of Singapore's social security system, including home ownership and healthcare assurance, have been strengthened over time.
The BRS has been adjusted regularly in line with rising income levels. It is now $90,500 for the cohort turning 55 this year.
The Government will continue to adjust the BRS by 3 per cent a year for the next two cohorts. It will be $93,000 for those turning 55 next year, and $96,000 for people hitting 55 in 2022.
"These modest continuing adjustments are necessary for the payouts to keep up with basic retirement expenses," said Mr Heng.
The Government expects 70 per cent of actively employed people from these two cohorts to be able to set aside their BRS, significantly more than the 40 per cent about a decade ago.