RETIREMENT PLANNING

CPF

Central Provident Fund

The Singapore Central Provident Fund is a compulsory social security savings plan for Singapore Citizens and permanent residents. The original objective of the Central Provident Fund was that of a compulsory savings vehicle to provide for members' retirement needs. However, it has since evolved to cover the following scope:

• Retirement
• Healthcare
• Home Ownership
• Family Protection
• Asset Enhancement

• Ordinary Account - the savings can be used to buy a home, pay for CPF insurance, investment and education.

• Special Account - for old age, contingency purposes and investment in retirement-related financial products.

• Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance.

Changes to CPF and Challenges

The CPF scheme underwent major changes in 2003 in a bid to make Singapore wage system more flexible and competitive. Some of the key changes include a reduction in contribution rates, reduction in CPF salary ceiling and a rise in CPF minimum sums scheme.

Singaporeans have yet to factor in how these changes will affect them over the long term and with competing objectives for the same pool of CPF capital, there is a greater urgency to plan on how to maximize the CPF. Also, with an ageing population, the challenge is to help members to enhance the long term return on their CPF to provide sufficient nest egg during retirement.