CPF changes wef 1 January 2016

I refer to the article “More CPF savings with new rules” (Straits Times, Jan 2).

It states that “Several changes to the Central Provident Fund (CPF) scheme kicked in yesterday to help workers accumulate more savings for their retirement.

The CPF salary ceiling, the maximum amount of ordinary wages that employee and employer contributions are calculated on, was raised from $5,000 to $6,000.

The annual contribution cap within the Supplementary Retirement Scheme, in which people can voluntarily save money and receive tax benefits, has also been raised to $15,300 for Singaporean citizens and permanent residents and $35,700 for foreigners.

Workers aged 50 to 65 also saw their CPF contribution rate rise yesterday.

Workers aged 55 and above now also receive an extra 1 per cent interest on the first $30,000 of their CPF savings.”

Why only mention 4 of the 5 CPF changes? 

What may be interesting is that the subject news report on CPF changes from 1 January 2016 – only talked about the four “good” changes, but there is no mention on the arguably one “bad” change.

Medisave “retention sum” increased to $49,800?

The Basic Healthcare Sum (BHS) of $49,800 will replace the Medisave Minimum Sum of $43,500.

What this may mean for some CPF members is that for starters, they may have another $6,300 ($49,800 – $43,500) locked up in their Medisave account.

Basic Healthcare Sum “will need to be adjusted yearly”

In a Parliamentary reply on 13 April 2015 – “The BHS will need to be adjusted yearly, to keep pace with growth in Medisave, due to inflation and expanding uses of Medisave. This is to ensure that we will have enough savings for our healthcare needs after retirement.  Once a person reaches age 65, his BHS will be fixed for the rest of his life.”

Leong Sze Hian