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Fact check: Top 7 things you need to know when you turn 55

27 Aug 2015 
SOURCE: CPF Board

1.         What happens to my CPF accounts savings when I turn age 55?

On your 55th birthday, a Retirement Account (RA) will be created for you and savings from your Special Account (SA) and Ordinary Account (OA) will be transferred to your RA to form your retirement sum.

Your retirement sum will be used to buy a CPF LIFE annuity to provide you with lifelong monthly payouts from your payout eligibility age which is currently at age 65. 

If you are 55 this year, you can also withdraw a portion of your savings from your OA, SA and MA. You can withdraw up to a maximum of $5,000 and any balance in your OA, SA and MA after setting aside the current Medisave Minimum Sum (MMS) of $43,500 and the Full Retirement Sum (FRS) or Basic Retirement Sum (BRS) if you have sufficient property pledge or CPF charge on your property.  From 1 January 2016, the MMS will be removed and you no longer need to top up your MA before making a withdrawal.  

 

2.         How much payouts will I get based on my retirement sum?

The payouts you will receive depends on your retirement sum. The illustration below shows how much you will receive should you set aside the BRS, FRS or the Enhanced Retirement Sum (ERS), which is 3 times the BRS. This is on the assumption that you start your payouts at age 65. However, your payouts will be higher should you defer your payout start age (PSA). Your payouts will permanently increase by 6% to 7% for each year that PSA is deferred. 

You can use the CPF Life Payout Estimator to see how much you can expect to receive based on different retirement sums.

CPF Monthly Payout.png 

3.       What happens if I do not meet the Basic Retirement Sum (BRS) or Full Retirement Sum (FRS) at age 55? Do I need to top up with cash or sell my house to meet BRS?
If you do not have the BRS or FRS in your RA at age 55, you do not have to top up your RA in cash or sell your property. This just means that you will receive a lower monthly payout. You can still withdraw up to $5,000 from your CPF Ordinary and Special accounts from 55.  

If you receive new CPF contributions, government top-ups or other refunds after age 55, part/all of these inflows will be transferred to your RA subsequently. 

 

4.       When will I need to decide to set aside Basic Retirement Sum (BRS), Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS)?  Can I still top up anytime to qualify for higher payouts?

A few months before your 55th birthday, we will inform you of the payout choices depending on your CPF balances. The table below shows the different retirement sums and corresponding monthly payouts. You can choose to set aside the BRS, if you own a property and choose to pledge your property. The excess RA savings (excluding top-up monies, interest earned, and any government grants received) may be withdrawn if you have sufficient pledge/charge on the property.

If you wish to enjoy higher monthly payouts, you can transfer your SA and OA savings to your RA, or top up your RA with cash anytime. From January 2016, the maximum amount of savings you can have in your RA is capped at ERS.

 

ConditionYour monthly payout* for life from 65Retirement Account savings required at 55
If you own a property and choose to pledge your property.$660 - $720Basic Retirement Sum (BRS)
$80,500
If you do not own a property or choose not to pledge your property.$1,220 - $1,320Full Retirement Sum (FRS)
$161,000
The FRS is 2 x BRS.
If you wish to put more savings in CPF LIFE.$1,770 - $1,920Enhanced Retirement Sum (ERS)#
$241,500
The ERS is 3 x BRS.

*Payouts are estimates based on CPF LIFE Standard Plan parameters in 2016. Applicable for members who turn 55 from 1 July 2015 to 31 December 2016

#Available from January 2016

 

5.       How does property pledge/charge work?  

If you have used your CPF to buy your property, a CPF charge would have been lodged on your property. The amount of the charge is equal to the total amount of CPF savings you have used towards the property plus the interest you would have earned on those savings if you had not withdrawn it for the property purchase. This amount is to be refunded to your CPF account when you sell your property to build up your retirement savings. If you buy another property, you can use your CPF savings again. 

From 2016, you can withdraw the RA savings (excluding top-up monies, interest earned, and any government grants received) above your Basic Retirement Sum from age 55, if you have sufficient charge on your property. The CPF charge is considered sufficient if it can restore your RA up to your Full Retirement Sum upon the sale/transfer of the property.  

If you own a property but do not have sufficient CPF charge, you can still withdraw your RA savings above your Basic Retirement Sum by pledging your property. The pledge does not affect your ownership of the property. It simply means that if you sell your property later, the amount pledged will be returned to your CPF account, in addition to the total amount of CPF savings you have used towards the property plus the interest you would have earned on those savings.  This is to ensure that your retirement payouts are restored.

Withdrawing your RA savings above your Basic Retirement Sum based on the property pledge/ charge will reduce the monthly payout that you will receive from your payout start age. 

 

6.       Can I sell my property if I made a property pledge?  

A property pledge/charge does not affect your ownership of the property, or your right to sell it. It simply means that if you sell your property, you need to refund the pledged amount in addition to the total amount of CPF savings you used for the property plus the interest you would have earned on those savings. If the proceeds from selling your property are insufficient to make up the refund required, you do not need to make up the shortfall as long as your property is sold at or above its current market value.  

The amount refunded will be used to top up to:

  • your Retirement Account up to the Full Retirement Sum  to restore your monthly payout; and
  • your Medisave Account (MA) up to the current Medisave Minimum Sum (MMS) to cater for your healthcare needs.

Any balance after accounting for the above will be paid to you in cash.

From 1 January 2016, the MMS will be removed. You will no longer be required to top up your MA before withdrawing the balance refund in cash. In view of this upcoming change, from now till 31 December 2015, you have the option not to top up your MA when making a housing refund withdrawal.

 

7.       Can I still use CPF savings to purchase a property when I turn 55? 

Yes, you can use your Retirement Account (RA) savings (excluding top-up monies, interest earned, and any government grants received) above the Basic Retirement Sum and Ordinary Account savings (including future contributions to the OA)  to pay for your property, subject to the applicable housing limits.

To check the estimated RA savings that you are able to use above the Basic Retirement Sum for your next property, please follow the steps below:

  1. Log on to your CPF Account via CPF website using your SingPass
  2. Click on 'My Statement'
  3. Under Section A, Retirement Account, click on 'Click for details'
  4. Click on 'My Retirement Account'
  5. The amount that you can use for housing will be shown as follows:  "ONLY THE AMOUNT OF $xx,xxx.xx IN YOUR RETIREMENT A/C CAN BE USED TO BUY A PROPERTY AND SERVICE THE MORTGAGE LOAN."  

(note: the BRS/FRS/ERS and CPF LIFE figures in this article are based on 2016 information. The figures are adjusted every January. Please click for the latest figures for the former and latter)

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