The Central Provident Fund (CPF) is a comprehensive social security system in Singapore that helps Singaporeans save for retirement, healthcare, and housing needs. It is a mandatory savings scheme for working Singaporean citizens and permanent residents, as well as for employers, and it is administered by the Central Provident Fund Board (CPFB), a statutory board under the Ministry of Manpower.
Key features of the CPF system include:
Mandatory Contributions: Both employees and employers are required to contribute a portion of the employee’s monthly salary to the CPF. These contributions are allocated to various CPF accounts for different purposes.
CPF Accounts: The CPF contributions are allocated into three main accounts:
i) Ordinary Account (OA): Used for housing, insurance, investment, and education.
ii) Special Account (SA): Primarily for retirement savings and investment in retirement-related financial products.
iii) Medisave Account (MA): Reserved for healthcare expenses, including hospitalization, medical insurance, and approved medical treatments.
CPF Life: CPF members who reach the age of 55 can join the CPF Life scheme, which provides them with a lifelong monthly payout to support their retirement needs. CPF Life payouts are designed to provide a steady stream of income during retirement.
Withdrawals and Usage: CPF members can use their CPF savings for various purposes, including purchasing residential properties, paying for education and healthcare expenses, and investing in approved financial products. Withdrawal rules and eligibility criteria vary depending on the specific CPF account and purpose.
Interest Rates: The CPF savings earn interest at rates set by the government, which are reviewed quarterly. The interest rates for the various CPF accounts may differ.
Voluntary Contributions: CPF members can make voluntary contributions to their CPF accounts to enhance their retirement savings, enjoy tax relief, and grow their CPF balances.
Employer Contributions: Employers are required to contribute to their employees’ CPF accounts, in addition to the employees’ contributions. The employer contribution rates are stipulated by law and may vary depending on factors such as the employee’s age and total wage.