CPF Basic Retirement Sum: How to Maximise Your Retirement Payouts

Worried that you can’t meet the CPF Retirement Sum? Don’t fret! Here are 5 ways you can achieve it and retire with a peace of mind.

One of the key announcements in Budget 2022 is that the CPF Basic Retirement Sum (BRS) will be raised by 3.5% every year from 2023 to 2027 to keep up with inflation. In other words, the Retirement Sums for CPF members who turn 55 from 2023 to 2027 will be higher.

Naturally, the thought of not being able to meet the retirement sums may be worrying for some. But before you start panicking, with a little planning and discipline, achieving that amount is very much possible. But first…

What is the CPF Retirement Sum?

Basically, the CPF Retirement Sum is the amount of money you need to set aside in your CPF Retirement Account (RA) when you turn 55 years old, in order to receive monthly CPF LIFE payouts from 65 years old onwards (a more detailed explanation of the Retirement Sum can be found in our article here).

Upon reaching 55 years, all Singaporeans and Singapore Permanent Residents will automatically have a CPF RA created, and the funds in your CPF Ordinary Account (OA) and CPF Special Account (SA) will be transferred to your CPF RA. 

The amount of money you need to set aside in your CPF RA is based on the Retirement Sum of that year, which is adjusted annually by the CPF Board. 

For example, if you’re 55 years old in 2022, the Basic Retirement Sum (BRS) is S$92,000 and the Full Retirement Sum (FRS) is S$192,000, which translates to a monthly payout of S$850 and S$1,570 respectively when you reach 65 years of age. 

There are three tiers of the CPF Retirement Sum: 

• Basic Retirement Sum (BRS)
• Full Retirement Sum (FRS), which is 2X the amount of BRS; and 
• Enhanced Retirement Sum (ERS), which is 3X the BRS

As mentioned, the BRS will increase by 3.5% from 2023 to 2027, which means the FRS and ERS will also increase by 3.5% in the same period:

Retirement sums for those turning 55 from 2022 to 2027

Based on the Retirement Sums above, here’s the estimated monthly payouts you will receive from 2022 to 2027:

Monthly payouts for those turning 55 from 2023 to 2027 based on the Retirement Sums:

As you can see from the table above, the amount of monthly payouts you receive is determined by the amount you’ve set aside in your CPF RA when you are 55 years old. In other words, the more funds you have in your CPF RA, the higher your monthly payouts.

Remember, the Retirement Sum is just a benchmark to supplement your retirement years; there’s no strict requirement to meet this amount, so don’t stress yourself out. Furthermore, there’s a great degree of flexibility allowed as you can always top up your CPF account with cash. If you need help on how to maximise your CPF LIFE payouts, this article might help. 

Even so, with the rising costs of living, you may wonder if it’s even possible to achieve the Retirement Sum. Fret not, there are five ways you can meet your FRS a lot quicker: 

1. Make top-ups to your CPF SA via the Retirement Sum Topping-Up Scheme (RSTU)

The Retirement Sum Topping-Up Scheme, or RSTU, helps you to grow your retirement savings. Via the RSTU, you can use cash or funds from your CPF OA to top up your CPF SA. 

Not only will you grow your retirement savings and receive higher CPF LIFE payouts, the money parked in your CPF SA also earns you a higher compound interest of up to 5% instead of 2.5% from your CPF OA. 

What’s more, from 2023, you’ll also get to enjoy tax relief of up to S$8,000 per year if you top up your own CPF SA, and up to an additional S$8,000 if you make a top-up for your family’s CPF SA, meaning you'll be eligible for up to S$16,000 in total. However, note that only cash top-ups will be eligible for tax relief.

If you’re below 55 years, the maximum amount you can set aside in your CPF SA is based on the current FRS, which is S$192,000 in 2022. 

For those 55 years and above, top-ups can only be made to your CPF RA, and the maximum amount is based on the current ERS of S$288,000 in 2022. 

Note that transferring funds from your CPF OA to CPF SA is irreversible, and you can’t transfer your funds back to your CPF OA. So make sure that you’re not planning to use the funds in your CPF OA for other purposes, such as buying a property or paying your mortgage. 

2. Make voluntary cash top-ups to your CPF accounts

Another way to build up your retirement savings is to make voluntary top-ups to your CPF OA, CPF SA, and MediSave accounts. 

However, you can only make cash top-ups, and the maximum amount is based on the current CPF Annual Limit, which is S$37,740 (including mandatory top-ups you’ve made for the year). 

You can also choose to top up your MediSave Account, but the maximum you can contribute to MediSave is based on the Basic Healthcare Sum (BHS), which is the maximum amount of savings you can have in your MediSave account when you hit 65 years old. The BHS is also adjusted yearly.  

While this helps to build up the savings, the caveat is that you won’t enjoy tax relief if you choose to top up all three CPF accounts.

3. Grow your CPF-SA and OA funds with CPF Investment Scheme (CPFIS)

Aside from making top-ups, you can also grow your CPF savings with CPFIS. The CPFIS allows you to use a portion of your CPF savings to invest in investments such as insurance products, bonds, Exchange Traded Funds (ETFs), unit trusts, fixed deposits, and shares. 

However, there are restrictions and requirements to what you can invest in:

You may refer here for the full list of investment options under CPFIS. 

4. Make cash top-ups to your MediSave Account

Did you also know that you can make cash top-ups to your MediSave Account? Similar to the CPF SA, your MediSave Account gives you an interest of 4% per year.

Also, once you’ve reached the BHS, any additional contributions to your MediSave Account (including mandatory contributions) will be diverted to your CPF SA. This means that you’ll continue to earn 4% interest per year, which would help to you reach the FRS. 

5. Choose not to draw from your CPF when you reach 55 years of age

When you reach 55 years, you can withdraw some of your savings from your CPF accounts (OA and SA), depending on the amount of savings you have in your CPF accounts.

• If you have S$5,000 or less, you can withdraw all your OA and SA savings
• If you have more than S$5,000 but less than your BRS, you can withdraw S$5,000. However, if you’re a property owner with a remaining lease of that can last you until 95 years, you can withdraw any excess amount above the BRS 
• If you have more than your FRS, you can withdraw S$5,000 or any excess amount above the FRS from your OA and SA, whichever is higher. Similarly, you can withdraw any excess amount above the BRS if you own a property with a remaining lease that can last you until 95 years

(You may also pledge your property to the CPF Board to increase your savings as its value will be counted as part of your savings. However, note that if you sell your property, you will need to return the sale proceeds back to your CPF account up until it meets the FRS. Read more about this here.)   

However, you can also choose not to withdraw any amount from your CPF and let the interest grow. Additionally, you may also choose to park your money in your CPF Account for even longer and delay your CPF LIFE payouts beyond the age of 65 years to grow your interest. 

Conclusion

While the BRS will continue to increase to keep up with inflation, don’t be too worried about it as long as you make the most out of your CPF. 

In fact, according to this Business Times article, the number of voluntary contributions has been increasing over the years. In 2021, more than 220,000 CPF members have made voluntary top-ups to their own or family members’ accounts, leading to a new peak of S$4 billion in CPF top-ups.

Moreover, the government has also said that 8 in 10 active CPF members who will be 55 years old in 2027 are expected to at least meet the BRS. 

If you have a longer time horizon and are planning to aim for a higher retirement sum, check out the best online brokerages for your investment needs.  

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Read these next:

A Complete Guide To CPF In Singapore (2022)
7 Investments You Can Make Under The CPF Investment Scheme (CPFIS)
Complete Guide To CPF LIFE: Facts, Myths And How To Make It Work Harder
Pros And Cons Of Keeping Your Savings In Your CPF Special Account
Beginner’s Guide To CPF Retirement Sums And How To Get There (2022)