CPF to raise Medisave Required Amount from $18,000 to $25,000 from Jan 1 next year
December 10th, 2009 | 
Author: The Central Provident Fund (CPF) Board had announced that the Medisave Required Amount or MRA will be raised from the current $18,000 to $22,500 from January 1 next year.
The MRA scheme was introduced in 2004 for CPF members who turn 55 and are able to meet the CPF minimum sum.
They are required to set aside a required amount in their Medisave account when they make a CPF withdrawal.
If they have less than the required amount in their Medisave, they will have to use the excess amount in their Ordinary and/or Special accounts to top up the difference.
The minimum sum was introduced in 2003 to ensure that Singaporeans have sufficient funds in their CPF to meet their retirement needs.
Before 2003, all CPF members are able to withdraw their entire CPF in one lump sum when they reach 55 years of age.
The minimum sum, which was set at $80,000 in 2003 has been increased to $117,000 this year. Further increases are expected yearly from 2010 till 2013.
This means that a Singaporean needs to have at least $117,000 in his CPF account before he is able to withdraw a single cent when he reaches 62 years of age now (The age for withdrawal is also raised from 55 to 62)
For example, if one has $120,000 in his CPF, he can only withdraw $3,000. The rest of his CPF will be disbursed to him monthly till it runs out.
If the CPF holder dies prematurely, his CPF will be passed on to his children or his nominees.
All Singapore citizens have to contribute 20 per cent of their monthly income to the CPF while their employers will contribute 13.5 per cent.
Besides changes to the MRA, the government will also maintain the 4 per cent floor rate for interest earned on all Special and Medisave Accounts (SMA) monies and Retirement Account (RA) monies for another year until Dec 31, 2010.
Introduced in the 1960s initially as a national pension scheme, many Singaporeans are finding it difficult to rely on their meager CPF savings for retirement.
A large part of their CPFs is tied up with housing loans to finance their HDB flats whose prices have sky-rocketed over the years.
The repeated increases in the CPF minimum sum and the postponement of the withdrawal age by the government is meant to prevent Singaporeans from depleting their CPFs early and thereby end up penniless and dependent on the state for social support when they grow old.
Though Singapore is a first-world developed country, it offers few social welfare benefits for its citizens who are expected to be self-reliant by themselves.
The government insists that providing more welfare and handouts to the people will create a “crutch mentality” thereby retarding the nation’s competitiveness and going down the slippery road of a welfare state as seen in the West.
While Singaporeans are expected to work for as long as they can to support themselves, the wealthy Singapore government is able to splurge billions of dollars in overseas investments through its two sovereign wealth funds Temasek Holdings and GIC.
It was reported by Wall Street Journal that GIC lost about SGD $59 billion dollars in the fiscal year ended March, but few Singaporeans are aware of it as the state media censored the news.
[Source: Wall Street Journal, 29 September 2009]
There is no opposition in parliament to check on the ruling party. Neither is there a free press in Singapore to expose the wrong-doings of the government and to educate citizens on their rights.
News source: Straits Times, 10 December 2009
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Tags: 30 Responses to “CPF to raise Medisave Required Amount from $18,000 to $25,000 from Jan 1 next year”
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Sign of desperation.
luckily i’m a rich man and don’t need to worry about CPF
Whatever you put into CPF, theres no hope of taking anything out. The system is broke.
Have to put a stop somewhere. In order to show our disagreement to allow them to continue increasing CPF intake, lets send a clear signal to the ruling party this GE.
Must hit them very hard this time.
Peter Su on Thu, 10th Dec 2009 4:22 pm -
Lies and lies again. But why do people wish to lie? Don’t they know Singaporeans are acutely awaret of things pertaining to money?
My dad who passed away 2 years ago. He got most of his CPF back upon reaching 55. When he passed away later the CPF wrote to us, being the next of kin, to collect whatever was in his Medisave & RA as well. All in a cheque, clean and simple?
Nothing was withheld. And I don’t believe the CPF holds back people’s money. What he could receive was taken upon 55 and what’s in the “safety net” was also return as inheritance to his own.
It’s indeed a sad episode when one’s accumulated earnings kept as CPF cannot be utilised for oneself to be spent for the golden years after 55. All Singaporean lives are fully manipulated by the ’so-called’ wealth hunger government whom has incurred huge spendings and losses through overseas investments and pay-outs to staff especially the Top Level Management throughout the years.
Yes, they tell you that you’re too stupid to manage your own money, and worst still can be conned by China woman.
Who knows what’s the rationale for holding back the money. To cover up for TH loses? To pay the greedy million-dollar-ministers?
No the system is not broke, the people is broke,
FamiLEE need more money, this time round they are going to invest in China Man Bond. Not Lehman Borther Bond.
Re: Peng Li on Thu, 10th Dec 2009 4:41 pm
I regret to hear of your dad’s passing. I am glad you folks collected the money back. That was the experience of your Dad’s CPF. Your dad’s time.
Your time will be very different. Recently, I visited the CPF office to enquire about CPF Life, I have lots of questions which the CPF counter staff could only say “pls send your enquiry to “cpf-life@cpf.gov.sg”.
One thing I must admit, the counter staff are very patient and courteous. But being patient and courteous is immaterial to me as far as my future income and my money is concerned.
While “the payout range for CPF life is based on CPF interest rates of between 3.75% and 4.25% and does not represent the lower and upper limits of the payout” [refer to pg 6 of "A guide to CPF life"], I asked what would happen to the payout if the interest rates dropped to say 2% – will my payout be still within a narrow band [+/- S$10 of the indicated payout in the booklet] as they told me over the counter? What if the interest rates run up to say 8.5% – will my payout be doubled? How much will I be getting? They asked to send my enquiry via the e-mail. Why can’t they tell me in black and white up front?
If I choose to withdraw from CPF Life [e.g. I give up my Singapore passport], while it is written on page 14 of the same booklet, that I “will receive a discounted refund of the savings”, this begs the question – how much is the discount? Again they asked me to e-mail them for an answer. Could it be such very steep discount that they felt embarrassed to disclose? Or could it be just some token administrative fee? They refused to give me an answer. Why?
If you go through those booklet carefully, you will realised that the payout will initially be drawn from your Retirement Account. Only after you reach a certain age then the payout from the annuity kicks in – even though your 1st draw down age starts some 10 years after you hit 55. In the case of Life Basic Plan the annuity payout start age is set at 90. Yes, 90 years old. How many actually live till that age and for how long more if they so do? For the Life Balance Plan [default plan] it is set at 80 year old. OMG!! What a ripped off. [Pg 3 of the How CPF Life works]
There are alot more questions which I did not have satisfactory answers. BTW, please do not opt for that choice that offers no bequest. That one is a sheer ripped off. Imagine this, you sign up for that plan, and you passed away anytime between the next day and a day before turning 65. What will happened? Just say “bye bye” to all your money. Your next of kin will get nothing. Absolutely NOTHING. Thatz because you opt for no bequest. In pg 7 of “How CPF Life works” they even have the cheek to say “This is the trade off for choosing the highest payout among the four plans.” What payout when you did not even hit your draw down age yet?
Most of all, please refer to the back page of the “How CPF Life works”. Note the fine print under Note. “Correct as at Sept 2009… subject to any amendment thereof, as well as such terms and conditions which may be imposed by the Board from time to time” Where is the basis of the contract? Next day they say, “okay folks, no more money”. Like that can or not? How to protect our interest / money?
Anyway, for the record, both my parents have already passed away. Getting the money back is not simply a visit to CPF office. It takes about 2 months before the cheque arrived. Putting your money into CPF is instant. Your employer failed to put in on time, trouble time coming.
Nothing was withheld? Are you sure? What about those 2 months after submitting all the necessary documents?
Dear Peng Li, either you are truly naive or you are really dumb. Do make an effort to go to the CPF board and get for yourself those booklet which I mentioned above and checked out those pages where I extract quotations from. Satisfied for yourself that Dad’s time and yours will be a whole world of a difference. Just like the 1st generation of the PAP leader [except LKY], who were there to make Singapore a success story – for the people. Today’s PAP leader, which include LKY, are nothing but individuals who only look forward to their million dollar pay cheque. Where is their love for the citizen? Where is their passion to serve the people? They are so different. Please wise up.
AS HAS BEEN ANTICIPATED…MEDICARE COST IS GOING TO GO HOGHER AND HIGHER ESPECIALLY WHEN MEDICAL TOURISM-CUM-CASINO-OPOERATIONS COME MORE INTO PLAY.
THIS IS JUST THE START LINE,GET SET TO GO FURTHER…
PERHAPS TO JOHORE BAHRU UNLESS YOU DON’T MIND THAT TRAINEE
DOCTOR?
…THE POOR GETS EVEN POORER…YEAR AFTER YEAR,ELECTION AFTER ELECTION…BAD HABITS DIE HARD EVEN IN MODERN TIMES,THE SAME OLD TRICKS ARE STILL BEING APPLIED,HOW EASY CAN WE GET?
//Peng Li
I am glad there are people stupid enough to declare what you commented.
That will ensure the solvency of CPF life.
//Peng Li on Thu, 10th Dec 2009 4:41 pm
Sorry to hear that your dad passed away.
All CPF members should instead be entitled to utlise to its fullest with little/or no restrictions as well as be given the rights to decide to use his hard earned CPF savings fully during his life time when he was still alive. Its their own money.
Whereas the CPF system is made to ensure that a large residue sum (maximum amount retention) still remain after its members passed away.
Why?
In addition to present increase in Medisave balance from $18,000 to $25,000 announcement, the CPF system minimum sum was also increased from originally $80,000 to $117,000 presently, and will further be increased to $120,000. Plus, including the recent introduction of a new CPF Life program to stretch instalment payment longer at CPFs discretion.
Why do they need to do this?
Our PM initial suggestion (later abort) of a non refundable annuity to 85 yo clearly reflects the true state of CPF accounts. A very clear signal was sent to all CPF members then. Why?
in effect,the restriction of CPF wihtdrawal by members affect mainly lower strata of society.like some say,they are too rich to bother about that “meagre” savings.
by gradually allocating more and more cpf monies into medisave,the govt is merely trying to cover its backside on two fronts.
first,sudden mass withdrawal of cpf monies by baby-boomers could imply insolvency as most of our monies are already put into infra-structures and “long-term” investments which may not as yet be making money or worse,in deficit?
secondly,the ageing population implies more healtcare concerns and as most cpf members are common workers,these in effect alleviate the need for the govt to find funds to return to members as by and by,they would craftily increase hospitalisation and other medical fees.YOu see,most of us would end p visiting only govt hospitals.
at the end of the day,we are hardly left with anything as even the flat you bought is still govt’s property.
Was CPF originally made to evolve to this present state?
What will they think of next?
//Peter Su on Fri, 11th Dec 2009 12:00 am
“Whereas the CPF system is made to ensure that a large residue sum (maximum amount retention) still remain after its members passed away.
Why?”
CPF insists and tries to keep a much larger residue balance than what is needed after death.
Its like taking from newly added members accounts to pay other decease next-of-kin. (Robbing Peter to pay Paul).
As Temasek and GIC going deeper into the red, more will be needed from CPF members to do national service for Spore Inc.
Recent reports of Temasek issuing 30 years bonds at 115 basis points over US treasuries while we, CPF members are only getting a 1% margin over Spore Govt Bonds. Why not 1.15% instead?
Our other GLC, CapitaLand also started borrowing large thru issuing SGD and USD long term bonds – paying high margin.
Our govt is starting to borrow from international sources.
WHEN ARE WE GOING TO HEAR A PIECE PRO-CITIZENS NEWS LIKE
THE GAHMEN HAS DECIDED TO CUT GST inview of the poor economy and high unemployment?
or,the LTA is considering building mutiple highways to alleviate traffic jams along CTE and are considering scraping
ERP?
or all glcs and tlcs like singapore power and singtel are considering to lower rates for all families in xxx income groups?
or that,glcs and tlcs would consider to take the lead in only
optimising profits instead of merely maximising profits so as
to create employment for citizens displaced by our regrettable mistake of FT policy?
when,may i ask,will the govt announce any of the above pro-citizens and pro-economic growth news?
dont know what you are talking about here:
//Whereas the CPF system is made to ensure that a large residue sum (maximum amount retention) still remain after its members passed away.
Why?
Halting construction of sports hub is a sure sign . How much is really left in our CPF account ? How many of those 40 years and above still earning a decent income , let alone working ?
“CPF insists and tries to keep a much larger residue balance than what is needed after death.
Its like taking from newly added members accounts to pay other decease next-of-kin. (Robbing Peter to pay Paul).”
CPF = Compulsory Ponzi Fraud.
Please vote wisely.
//cat on Fri, 11th Dec 2009 1:36 am
“dont know what you are talking about here”
Lets say a member on records dies at between 68yo-70yo average.
Previously, CPF members were allowed to withdraw fully/or almost all their savings at retired age at 55yo and leaving very little in Retirement Account (RA).
Today, CPF members have to leave $117,000 in RA at 55yo, and only at 62yo he starts small withdrawals of $900 per month i.e.($117,000 + $30,000 (7 yrs@ 4% interest) / $900) = 163 months (13.5years)until age 75.5 yo.
Withdrawal age from 62yo to 68yo is 72 months (i.e. only 6 years).
Whereas RA provides for 163 months withdrawals till 75.5yo. That is to say leaving $900 X 91 months remaining = $81,900 residue after death. And thats not including an accumulated interest earned portion on balances starting at 62yo.
Besides, a gap from 55yo to 62yo was in fact torturing for some retirees but CPF said you have already withdrew a large portion at 55yo. How about those withdrew little at 55yo?
Thus, from their RA of $117,000, a member lives to enjoy only $35,100 till he dies and leaving $81,900 + accrued interest for next-of-kin.
Am I wrong to say?
//cat on Fri, 11th Dec 2009 1:36 am
dont know what you are talking about here:
“//Whereas the CPF system is made to ensure that a large residue sum (maximum amount retention) still remain after its members passed away.
Why?”
The increase of Ritrement Acct from $80,000 to finally $120,000
speaks the truth.
From what I can read on the CPF website (http://mycpf.cpf.gov.sg/CPF/News/News-Release/N_09Dec2009.htm) the amount has been increased to $22,500 instead of $25,000. Is this inaccuracy on the part of TR, or has the value been adjusted by CPF, since no one pointed this out?
Because of the shortage of new funds inflow to CPF Board from an already declining large retired population and those Singaporeans who emigrated or worked overseas.
New migrants, PRs and FT are needed to top-up this shortfalls. And also to increase Minimum RA balances and Medisave Acct too.
Btw, the increase of Minimum Sum is not simply to $120K by 2013. Rather it is $120K IN 2003 DOLLARS, i.e. inflation adjusted. With high inflation probably coming in 2011, 2012 and 2013, the MS by 2013 will be about $140K. Thereafter, CPF will adjust the MS upwards yearly according to inflation.
Don’t believe? The govt phased-in the increase in MS from $80K in 2003 to pre-inflation $120K by 2013, i.e. $4K increase per year. If there is no inflation-adjustment, the MS right now should be $80K + ($4K X 6yrs) = $104K. Instead it is now $117K. How come? Inflation loh!
This inflation adjustments will also apply to Medisave Required Amount: from $18K in 2009 until $25K by 2013 IN 2003 DOLLARS. In nominal face value, it will probably be around $28K in 2013.
The $22,500 figure is for year 2010, i.e. increase by around $2.5K yearly until 2013.
There is also another animal called Medisave Minimum Sum which is also increased every year, adjusted for inflation. This is the amount to be retained in Medisave, even if you have plenty of $$$ in Medisave and wish to withdraw some after 55 yr old. As at Jul 2009, the MMS is $32K.
Even better, from 2011 onwards the SMRA interest rate will be based on 10-yr SGS average yield + 1%. At the moment this works out to 2.31% + 1% = 3.31%. Bye bye 4%!!
Regarding Draw-Down Age, when you start getting monthly payouts either from CPFLife or Minimum Sum:- If you are aged 59 and below in 2009, the DDA is no longer 62. For those who are 55 and below in 2009, your DDA is now 65 yr old. So you need to work until 65 birthday, or else plan your retirement better.
Looking at all the above, it will get increasingly harder to “cash out” your CPF in 1 lump-sum. If you are 45 yr old and below in 2009, you can practically forget about it. Even if you high-income earner with $20K/month salary, CPF contributions only effective on the first $4.5K of salary. Therefore, growth of your CPF accounts will lag changing govt policies and constantly increasing Minimum Sums. But if you high-income earner, in the 1st place you won’t really depend on CPF for your retirement anyway.
For the rest of us, either you live with it, vote for change, or start learning indonesian or thai in order to prepare for retirement in low-cost country (get new citizenship/long-term residency, renounce SG citizenship & cash out all CPF).
//Amused on Fri, 11th Dec 2009 2:05 pm
“For those who are 55 and below in 2009, your DDA is now 65 yr old. So you need to work until 65 birthday, or else plan your retirement better.”
Its more or less bye bye to retirement, and from 55yo to 65yo, its a long 10 years gap….its suicidal for many of us.
But why the govt or the CPF seldom reveal to its members?
Well if the people still don’t wake up and vote for a change, then we will never know what kind of skeletons are hidden in closets..
When I first started contributing 29 years ago, CPF system was rather simple, easy and straight forward. Today, CPF changes almost everything (I compared those policy and restrictions).
Its my own money, so why CPF make it so difficult for me?
Its my own savings, so why CPF keep extending my withdraw age further?
Despite being a creditor (CPF owes me), why must I be manipulated by CPF to suit their ways and fnacy?
Misguided! CPF is heading for a CRASH!