CPF - Minimum Sum

Most of the info here can be found on CPF website. You can go from the link on my website. I just grab some info there and elaborate further here.

Firstly let us talk on the basis of Singaporean. I will try to give my own opinion whether CPF do you good or not. Let's face it, we can't run from CPF if you work in Singapore and even Malaysia too. Just that in Singapore you put more money into your CPF.

This is fact from CPF. It says CPF is your retirement, apparently Singapore government predicts your son/daughter will leave you alone when you grow old. So you need money to survive. It is actually a fact because you see a lot of Singapore youngster following western culture and more and more aged worker in McDonald. So, if one day your son/daughter don't care about you, you still have your CPF.

There is thing called Minimum Sum which is the amount that you must save in CPF after you take everything out on 55 years old. Before you take everything out you also must allocate fund of your Medisave Account. If your CPF amount is lesser than this Minimum Sum you will have to follow some special rules.

The Minimum Sum for (1 Jul) 2005 is $90,000. It will goes up according to the inflation rate so it is predicted to reach $120,000 on 2013. I mentioned just now that there is also minimum amount you must allocates in Medisave Account. For (1 Jul) 2005, this minimum amount is $5,100 (2003 dollars) and it will reaches $25,000 (2003 dollars) on 2013. What do I mean by (2003 dollars)? The amount is equivalent with 2003 amount and it will increases according to the inflation rate. For example, on $25,000 (2003 dollars) on 2013 and inflation rate for every year is 3% so it is about $33,600 on 2013 instead of $25,000. You can refer to Future Value calculation which I wrote earlier.

After my explanation above, let say you reaches 55 years old on 2013 and you have $160,000 in your CPF account (including interest). The amount you can take out is $160,000 - $120,000 - $33,600 = $6,400. Actually the amount to take out is quite low for Singaporean after deducting the money you used for buying HDB flat. I will write more in the case if your CPF can't reach Minimum Sum in the future.

Take note: Interest rate for CPF Ordinary Account is 2.5% pa and Medisave, Special Account & Retirement Account is 4.0% pa. (of course it will be moderated based on inflation rate)