CPF: Your Assurance in Retirement

Transcription

1 CPF: Your Assurance in Retirement 1

2 Reaching 55 At 55, it s time to make your next move CONTENTS 02 Introduction 03 Decisions to be made: What happens when you turn 55? How much can you withdraw at 55? Should you continue to save with CPF? How to withdraw? When do you join CPF LIFE? 13 Top up to enjoy higher interest and tax relief 16 CPF beyond What about your Medisave savings? 19 Conclusion 20 Annex A 21 Glossary 23 Notes The information in this publication applies to members turning 55 in Information is accurate as of 19 Oct

3 Introduction In the lead up to your retirement, you may have questions about how your CPF savings will provide for your retirement needs. When you reach the milestone age of 55 in your CPF journey, two events take place: A Retirement Account is created to set aside your retirement sum, which will provide you with a monthly income in old age. You can choose to withdraw a portion of your CPF savings. Singaporeans are living longer. This means that you need to save more or your savings may not be enough to last through your retirement. About half of Singaporeans who are 65 years old today are expected to live beyond the age of 85 and a third of them will live beyond 90 years old. Having an income throughout old age is more important than ever. To ensure that you have a monthly income for as long as you live, you can use your Retirement Account savings to join the CPF Lifelong Income for the Elderly (CPF LIFE) scheme. While withdrawal is an option open to you, you should consider stretching the value of your CPF savings by keeping them in your accounts so that there will be more retirement savings in your golden years. Apart from the attractive interest rates earned in your CPF accounts, you can make regular top-ups to your CPF accounts to boost your retirement savings. 2

4 What happens when you turn 55? On your 55 th birthday, we will create a Retirement Account for you. Savings from your Special Account and Ordinary Account will be transferred to your Retirement Account to form your retirement sum. Your Medisave savings will remain in your Medisave Account to pay for future healthcare expenses. Your retirement sum will provide you with a monthly payout. You are eligible to receive your payouts from your payout eligibility age, which is currently at age 65 for members who were born in 1954 or later. The payouts you will receive depend on your retirement sum. The more you set aside in your Retirement Account, the higher your payouts. The table below shows how much you will receive should you set aside the Basic, Full or Enhanced Retirement Sum, if you start your payouts at age 65. If you own a property and choose to withdraw your Retirement Account savings above the Basic Retirement Sum (subject to suffi cient property charge/pledge). If you do not own a property or choose not to withdraw your Retirement Account savings above the Basic Retirement Sum. If you wish to put more savings in CPF LIFE. Retirement Account savings you set aside at 55 Basic Retirement Sum (BRS) $80,500 Full Retirement Sum (FRS) $161,000 The FRS is 2 x BRS. Enhanced Retirement Sum (ERS) $241,500 Your monthly payout 1 for life from 65 under the CPF LIFE Standard Plan $660 - $720 $1,220 - $1,320 $1,770 - $1,920 The ERS is 3 x BRS. As long as you have set aside some monies in your Retirement Account, you will receive monthly payouts. The amount you will receive depends on how much retirement sum you have in your RA and the CPF LIFE plan you choose. 1 Payouts are estimates based on CPF LIFE Standard Plan parameters in

5 You only need to choose your CPF LIFE plan when you wish to start your CPF LIFE payouts, which is from your payout eligibility age onwards. Read more about CPF LIFE on page 9. I n f o r m a t i o n B o x To help CPF members plan earlier for retirement, the Basic Retirement Sum will be made known ahead of time. For each successive cohort of members turning 55, payouts need to be higher to account for long term infl ation and rising standards of living. Correspondingly, the Basic Retirement Sum to be set aside has to increase. AGE 55 IN 2016 AGE 55 IN 2017 AGE 55 IN 2018 AGE 55 IN 2019 AGE 55 IN 2020 BASIC MONTHLY PAYOUT 1 FOR LIFE FROM 65 $660 - $720 $680 - $740 $700 - $760 $720 - $780 $740 - $800 Basic Retirement Sum $80,500 $83,000 $85,500 $88,000 $90,500 4

6 OA + SA+ MA How much can you withdraw at 55? The amount that you can withdraw at age 55 depends on how much you have in your Ordinary and Special Account. Savings in your Ordinary and Special Account You can withdraw What does this mean? $5,000 or less All your Ordinary and Special Account savings. There will not be any monies transferred to your Retirement Account. Between $5,000 and $161,000 More than $161,000 (i) $5,000, and (ii) Any Retirement Account savings above the Basic Retirement Sum, if you have suffi cient property charge/ pledge. (i) $5,000 or your Ordinary and Special Account savings above $161,000, whichever is higher, and (ii) Any Retirement Account savings above the Basic Retirement Sum, if you have suffi cient property charge/ pledge. You can withdraw up to $5,000 from the savings in your Ordinary and Special Account. The remainder will form your retirement sum in your Retirement Account. If you own a property with suffi cient charge/pledge, you can choose to withdraw your Retirement Account savings above the Basic Retirement Sum of $80,500. You can withdraw $5,000 or your Ordinary and Special Account savings after setting aside the Full Retirement Sum of $161,000, whichever is higher. If you own a property with suffi cient charge/pledge, you can choose to withdraw your Retirement Account savings above the Basic Retirement Sum of $80,500. 5

7 Examples Here are some examples of how much one can withdraw at 55 based on their CPF savings. Ms Anita Ms Anita has just turned 55. A Retirement Account is created on her 55 th birthday. Ms Anita s Ordinary Account savings at 55 : $45,000 Ms Anita s Special Account savings at 55 : $55,000 As Ms Anita has $100,000, which is between $5,000 and $161,000, she can choose to withdraw $5,000 of her CPF savings from her Ordinary and Special Accounts. The remaining amount of $95,000 will form her retirement sum in her Retirement Account. If she owns a property with suffi cient property charge/pledge, she can choose to set aside her Basic Retirement Sum of $80,500 in her Retirement Account to receive a monthly payout of $660 to $720 from age 65 for life. In conclusion, she can withdraw $5,000 from her Ordinary and Special Accounts, and an additional $14,500 from her Retirement Account if she has suffi cient property charge/pledge. Mdm Polly Mdm Polly s Ordinary Account savings at 55 : $100,000 Mdm Polly s Special Account savings at 55 : $180,000 Mdm Polly can choose to withdraw $119,000 after setting aside the Full Retirement Sum of $161,000. The remaining amount of $161,000 will form her retirement sum in her Retirement Account, which will provide her with a monthly payout of $1,220 - $1,320 from age 65 for life. If she owns a property with suffi cient property charge/pledge, she can also choose to set aside her Basic Retirement Sum of $80,500 in her Retirement Account to receive a monthly basic payout of $660 to $720 from age 65 for life. In conclusion, she can withdraw $119,000 from her Ordinary and Special Accounts, and an additional $80,500 from her Retirement Account if she has suffi cient property charge/pledge. Mr David Mr David s Ordinary Account savings at 55 : $3,000 Mr David s Special Account savings at 55 : $1,000 As Mr David has less than $5,000, he can withdraw all the balances amounting to $4,000. 6

8 Earn Attractive Interest Should you continue to save with CPF? Withdrawing your CPF savings once you turn 55 years old is not compulsory. Tip 1 You can still make a withdrawal later! If you do not need the money, you need not withdraw your CPF savings at 55 years old. You can still make a withdrawal at a later date, or withdraw only part of the amount. For example, instead of withdrawing $5,000 from your CPF savings, you can choose to withdraw $2,000, leaving $3,000 which you can withdraw next time. Tip 2 Earn attractive interest! Your CPF savings will continue to grow with the attractive interest earned in your accounts. After you turn 55, your CPF accounts can earn up to 6% interest per year 2. Interest rates for members 55 and above (NEW) CPF balances Interest rate (p.a.) 3 First $30,000 6% Next $30,000 5% Amounts above $60,000 4% For a member with lower balances, the additional 1% amounts to about a 20% increase in his monthly payout, or about $40 more each month, for the rest of his life. For a member who sets aside the Basic Retirement Sum of $80,500 in 2016, his monthly payout will increase by about 6%. Tip 3 You can still use your Ordinary Account savings to pay your housing loan! If you need to continue using your Ordinary Account for your housing payments after age 55, you may apply to set aside some Ordinary Account savings for this purpose before they are transferred to your Retirement Account. However, this means you will set aside a lower retirement sum. As a result, your monthly payouts will also be lower. 2 Currently, your CPF savings in the Ordinary Account earn a guaranteed interest rate of 2.5% per year, while savings in the Special, Medisave, Retirement Accounts and your annuity premiums earn guaranteed interest rates of 4% per year. The fi rst $60,000 of your combined CPF balances, of which up to $20,000 from your Ordinary Account, earns an extra 1% interest per year. Combined balances refer to the total balances in your Ordinary, Special, Medisave and Retirement Accounts, including the annuity premiums for CPF LIFE less any payouts made. With effect from January 2016, an additional extra interest of 1% per year will be given on the fi rst $30,000 of your combined CPF balances (for members aged 55 and above). This is on top of the existing 1% extra interest on the fi rst $60,000 of balance. 3 Based on prevailing interest rates on balances in the Special, Medisave and Retirement Accounts. Balances in the Ordinary Account can earn up to 4.5% p.a. for members aged 55 and above. 7

9 How to withdraw? You will receive a letter from us a few months before your 55 th birthday. You can apply to withdraw your CPF savings once you receive the letter or any time later. Ways to apply for withdrawal Option 1: Online application Apply online at You will need your SingPass and a bank account with OCBC, POSB or UOB. Option 2: Form application Send us your application using the form(s) enclosed with the letter. You can also download the form(s) from the CPF website. 8

10 Golden Years When do you join CPF LIFE? With CPF LIFE, you will have the assurance of receiving monthly payouts for as long as you live. You will be placed on CPF LIFE if you are a Singapore Citizen or Permanent Resident born in 1958 or after, and have at least: (i) $40,000 in your Retirement Account when you reach 55 years old; or (ii) $60,000 in your Retirement Account when you reach 65 years old. If you are not placed on CPF LIFE, you can apply to join CPF LIFE when you wish to start your monthly payout, which will be from your payout eligibility age onwards. You can make your application anytime from the time you wish to start your monthly payout (which will be from your payout eligibility age onwards) and before you turn 80 years old. Alternatively, you can remain on the Retirement Sum Scheme, which provides you with a monthly payout for about 20 years. CPF LIFE plans available There are two plans under CPF LIFE: CPF LIFE Standard Plan; or CPF LIFE Basic Plan Each CPF LIFE plan provides a different combination of trade-offs between the amount of monthly payouts you will receive and the bequest you will leave for your benefi ciaries. You do not need to choose your CPF LIFE plan at age 55. You will choose your CPF LIFE plan only when you wish to start your CPF LIFE payouts. Your payouts can start anytime between your payout eligibility age and age 70. If you do not choose a plan before your 70 th birthday, we will automatically place you on the CPF LIFE Standard Plan. We will write to you nearer to your payout eligibility age to explain more about CPF LIFE. 9

11 Defer your payouts and get more From 1 January 2016, you will have more fl exibility to plan for your retirement. You can choose to join CPF LIFE and start your payouts anytime between age 65 and 70. For each year deferred, your monthly payouts permanently increase by about 6% - 7%. Example Option A Option B Basic Retirement Sum at 55 years old: $80,500. This grows to about $125,000 4 at 65 years old. Joins CPF LIFE with entire Retirement Account balance. Joins and starts CPF LIFE payout at 65. Monthly payout for life of about $660 - $720. Defers for 5 years. Joins and starts CPF LIFE payout at 70. Monthly payout for life increases to about $885 - $ Receiving your CPF LIFE payout Your payouts can start anytime between your payout eligibility age and age 70, after you inform us of your decision to start your payouts. We will pay the monthly payout to your bank account using Inter-Bank GIRO (IBG), or to your Ordinary Account if you do not have a bank account. 4 Based on CPF interest rates of up to 6% per year for members aged 55 and above from Payouts are estimates based on CPF LIFE Standard Plan parameters in 2016.

12 Benefitting from CPF LIFE with the LIFE Bonus You can receive a LIFE Bonus if you are a Singapore Citizen with at least $20,000 in your Retirement Account and have either: (i) Been placed on CPF LIFE; or (ii) Informed us before your 56 th birthday on your decision to join CPF LIFE. The LIFE Bonus will be paid into your Retirement Account to enhance your CPF LIFE monthly payouts. The amount of LIFE Bonus you can receive depends on your annual Assessable Income (AI) and the Annual Value (AV) of your home. AI AV of property $9,600 or less (TBC) Between $9,600 and $13,000 (TBC) $27,000 or less (TBC) $1,900 $1,500 Between $27,000 and $60,000 (TBC) $1,500 $1,050 The LIFE Bonus fi gures above are applicable to members turning 55 in If you have less than $20,000 in your Retirement Account before your 56 th birthday, your LIFE Bonus will be proportionately reduced. For more information on the LIFE Bonus, please visit I n f o r m a t i o n B o x What if I do not have $20,000 in my Retirement Account? You or your loved ones can make a cash or CPF top-up to your Retirement Account to make up this amount to receive the full LIFE Bonus. (See page 13 for more details) 11

13 Leaving CPF LIFE The CPF LIFE payouts will stop upon death and your benefi ciaries will receive a bequest (if any is due). Otherwise, once you have joined or are placed on CPF LIFE, you can only leave the scheme for the following reasons: You have a medical condition which causes you: To be permanently unfi t for any employment; To have severely reduced life expectancy; or To be terminally ill. You are about to leave/have left Singapore and West Malaysia permanently with no intention of returning for work or to live. You are a Malaysian Citizen and have left Singapore permanently to live in West Malaysia. You are fully exempted from setting aside the retirement sum in your Retirement Account because you are receiving a monthly pension/annuity payout. Both the CPF LIFE Standard Plan and the CPF LIFE Basic Plan have a refund feature. Upon death or you leaving the scheme, you will receive a refund of the unused premium (the savings used to join CPF LIFE minus any monthly payouts received). You may not receive a refund if we have already paid out all your savings used to join CPF LIFE as monthly payouts. 12

14 Top Up For Tax Savings Top up to enjoy higher interest and tax relief If you can, it s well worth topping up to boost your loved ones or your own Special Account or Retirement Account savings. Making a top-up up to the Enhanced Retirement Sum (available from January 2016) allows you to enjoy higher monthly payouts. Under the Retirement Sum Topping-Up Scheme, you can get tax relief 6 for cash top-ups. The tax relief is up to $7,000 per year if you top up for yourself and an additional $7,000 per year if you top up for your family members. You can make regular monthly and/or yearly top-ups to your loved ones and your own CPF accounts through GIRO 7. What are the criteria for cash and CPF top-ups? You can make a cash top-up to your loved ones and your own CPF accounts. Recipients below 55 years old can receive top-ups up to the current Full Retirement Sum, while those 55 years old and above can receive top-ups up to the current Enhanced Retirement Sum from Top-ups between the current Full Retirement Sum and the current Enhanced Retirement Sum do not qualify for tax relief. CPF members can also transfer their Ordinary Account savings to their loved ones (parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings) CPF accounts, if they meet the Full Retirement Sum they need to set aside when they turn 55, or the current Full Retirement Sum (for members below 55). The Full Retirement Sum can be met with your net balances in the Ordinary, Special and Retirement Accounts including amounts withdrawn for investments. From 2016, givers can transfer their CPF savings above the Basic Retirement Sum to their spouses CPF accounts. 6 Terms and conditions apply. 7 You can download and complete the GIRO Application form and Standing Instruction to make Top-Ups under the Retirement Sum Topping-Up Scheme via GIRO form, available at the CPF website. 13

15 Age group Top-up criteria for Givers Cash top-up CPF top-up Top-up limit for Recipients Below 55 N.A. Givers below 55 can transfer net Ordinary Account savings after setting aside the current Full Retirement Sum. From 2016, for transfer to spouse, giver only needs to set aside the current Basic Retirement Sum. Recipient below 55 will receive their top-up in their Special Account. The amount of top-up they can receive is: Current Full Retirement Sum Net Special Account Balance Amounts withdrawn from Special Account under the CPF Investment Scheme (CPFIS-SA) 55 and above N.A. Givers who are 55 and above can transfer net Ordinary Account savings after setting aside their own Full Retirement Sum. Recipients who are 55 an above will receive their top-up in their Retirement Account. From 2016, the amount of top-up they can receive is: From 2016, giver can transfer CPF savings above their own Basic Retirement Sum to their spouse. Current Enhanced Retirement Sum Retirement Account Savings Excludes interest earned since 55 years old, any government grants and monies withdrawn.

16 Transferring more CPF savings to your spouse From 2016, you will have additional fl exibility to transfer your CPF savings above the Basic Retirement Sum to your spouse s CPF account. With this, both of you can enjoy the benefi ts of the extra interest paid on the fi rst $60,000 of combined CPF savings. Refer to the example below. Before the transfer At age 55, Mrs Tan has $35,000 in her Retirement Account. At age 65, her Retirement Account balance will have grown to about $59,000 which will provide her with monthly payouts for about 20 years. If she chooses to join CPF LIFE, she can receive lifelong payouts. At age 55, Mr Tan has $100,500 in his Retirement Account. At age 65, Mr Tan will be placed on CPF LIFE with a Retirement Account balance of about $156,000. After the transfer Mrs Tan now has $55,000 in her Retirement Account at age 55. At age 65, Mrs Tan will be placed on CPF LIFE with a Retirement Account balance of about $90,000. Transfers $20,000 to Mrs Tan s CPF account Mr Tan now has $80,500 in his Retirement Account at age 55. At age 65, Mr Tan will be placed on CPF LIFE with a Retirement Account balance of about $127,000. After the transfer, Mr and Mrs Tan would enjoy an additional $2,000 in interest. Mrs Tan will now enjoy higher monthly payouts for life. 15

17 Beyond 55 CPF beyond 55 If you decide to continue working, you and your employer will still contribute to your CPF savings. You can continue to use the monies in your Ordinary Account to pay for any outstanding housing loans. However, do note that the contributions to your Ordinary Account will reduce, and this may affect how you manage your housing loan payments. So, if possible, try to pay off your housing loan by 55 years old! The table below shows the CPF contribution rates for employees aged 50 and above. Employee s age (years) 9 CPF contribution rates with effect from 1 January 2016 (for monthly wages $750) Employer contribution rates (% of wages) Employee contribution rates (% of wages) Total contribution rates (% of wages) Above 50 to Above 55 to Above 60 to If you continue to work and contribute to your CPF after 55 years old, the contributions will still be allocated to your Ordinary, Special and Medisave Accounts. You then have the following options: Top up your Retirement Account using the new CPF contributions to your Ordinary Account and Special Account to help build up your retirement savings. These additional savings may then be used to buy a CPF LIFE annuity when you reach your payout eligibility age. Withdraw the excess from your Ordinary or Special Account if you have set aside your Basic Retirement Sum with suffi cient property charge/ pledge or your Full Retirement Sum. Housing repayments If you continue working after 55, future contributions to your Ordinary Account contributions can also be used for your housing loan payments. You can use your Retirement Account savings above your Basic Retirement Sum (excluding top-up monies, interest earned, and any government grants received) for your housing needs You will move to the next age group in the month after your 50 th, 55 th, 60 th and 65 th birthday.

18 Insurance premiums You can continue to use your Ordinary Account savings for insurance premiums under the Home Protection Scheme (HPS)/ Dependants Protection Scheme (DPS), after setting aside your retirement sum at age 55. Selling your property If you sell your property, you need to refund the CPF savings that were used to buy it and the accrued interest 10. If you had also withdrawn from your Retirement Account by pledging your property, you need to refund the pledged amount as well. The amount refunded will be used to restore your Retirement Account up to your Full Retirement Sum. The balance of the housing refunds will then be paid to you. I n f o r m a t i o n B o x If you own a HDB fl at, you can generate income from your fl at for your retirement needs through the following options: Move to a smaller fl at or Studio Apartment and sign up for the Silver Housing Bonus to get a cash bonus when you top up to your Retirement Account Sign up for the Enhanced Lease Buyback Scheme and top up your Retirement Account to get a cash bonus Rent out your whole fl at or room(s) If you have any questions, please call HDB s toll-free hotline at , or visit The above is subject to the eligibility conditions under HDB s prevailing policies. 10 This is the interest you would have earned if you had not withdrawn your CPF savings for the property. 17

19 $ What about your Medisave savings? Your Medisave contributions will go into your Medisave Account until your balance reaches the Basic Healthcare Sum. Amounts above this sum will be transferred to your Retirement or Ordinary Account to boost your monthly payouts in retirement. The Basic Healthcare Sum is the estimated savings you need for your basic subsidised healthcare needs in old age. It will be set at $49,800 from 1 January 2016 for all CPF members. This sum will be adjusted yearly in January to keep pace with the growth in Medisave use by the elderly. Once you reach 65, your Basic Healthcare Sum will be fi xed for the rest of your life. You can continue to use your Medisave savings in the following ways: $ When you welcome your little baby Treatments to help with conceiving, pregnancy and delivery expenses To stay healthy Recommended screening tests, vaccinations and chronic disease treatments To pay for insurance premiums For MediShield Life, Integrated Shield Plans and ElderShield When you need repeated treatment Renal dialysis and treatments for cancers and other conditions ways 9YOU CAN USE YOUR For surgery or hospitalisation When the doctor advises you to go for a scan Medical scans such as CT and MRI For rehabilitation and recovery Stay at a community hospital or rehabilitation at a day rehabilitation centre When you fall ill in old age Flexi-Medisave for outpatient medical treatment when you are aged 65 or above For end-of-life care Palliative care at a hospice, or at home in the company of your loved ones 18

20 Conclusion Now that you have had the opportunity to consider your retirement planning, remember these three points: Make an informed decision on your desired CPF payouts. CPF LIFE provides you with lifelong monthly payouts. Consider topping up your loved ones and your own retirement savings for higher payouts. 19

21 Annex A Guide on decisions and actions you need to make on the CPF Investment Scheme (CPFIS) and CPF Education Scheme matters when you reach 55. When you want to withdraw your CPFIS and Special Discounted Shares (SDS) investments, or apply for waiver of the education loan repayment What How Upon successful application If you have set aside your Full Retirement Sum (or Basic Retirement Sum with sufficient property charge/ pledge) If you have not set aside your Full Retirement Sum (or Basic Retirement Sum with sufficient property charge/ pledge) Investments Apply online through My Request from the CPF website or complete form INV-Transfer. Education Apply online through My Request from the CPF website or complete form AES W1. Investments Top up your Retirement Account to meet your Full Retirement Sum (or Basic Retirement Sum with sufficient property charge/pledge) before you can withdraw your CPFIS investments and SDS investments. Education Top up your Retirement Account to meet your Full Retirement Sum (or Basic Retirement Sum with sufficient property charge/pledge) before you can apply for waiver of the education loan. Investments CPFIS-Ordinary Account (CPFIS-OA) We will inform your agent bank to close your CPF Investment Account. You may approach the bank for the withdrawal of your investments and cash after we have notified you. Your investments will be transferred to your name. You can then liquidate them if you wish and have the money made from the sale paid to you directly. CPFIS-Special Account (CPFIS-SA) We will inform your product provider(s) to transfer your investments to your name. You can then liquidate them if you wish and have the money made from the sale paid to you directly. Special Discounted Shares (SDS) We will transfer your SDS to your Central Depository (CDP) Securities Account. Service standards: CPFIS-OA & SA Form application We will notify your agent banks and product providers within three working days from the day we receive your application. After that, agent banks and product providers will liaise with you to get more information for the release. Online application One working day SDS Form or online application Within 15 working days from the day we receive your application and CDP transfer free (this includes CDP s processing time). Education Form application 14 working days Online application Up to two working days Up to eight working days if the application is submitted during the monthly Inter-Bank GIRO (IBG) deduction period, which typically takes place from the 15 th to 23 rd of each month. This is to take into account the bank s processing time for monthly deductions from students IBG accounts. 20

22 Glossary Term Definition Retirement Sum Basic Retirement Sum (BRS) The retirement sum to set aside at age 55 to receive a monthly CPF LIFE payout of about $660 - $720 from payout eligibility age. This sum is set at $80,500 for members who turn 55 in This assumes that the member owns a property and does not need to pay rent. Full Retirement Sum (FRS) The retirement sum to set aside at age 55 to receive a monthly CPF LIFE payout of about $1,220 - $1,320 from payout eligibility age. It is set at two times the Basic Retirement Sum (i.e. $161,000 for members who turn 55 in 2016). This assumes that the member does not own a property or does not wish to withdraw the Retirement Account savings above the Basic Retirement Sum. Enhanced Retirement Sum (ERS) available from January 2016 The retirement sum to set aside at age 55 to receive a monthly CPF LIFE payout of about $1,770 - $1,920 from payout eligibility age. It is set at three times the Basic Retirement Sum (i.e. $241,500 in 2016). CPF members who wish to have higher monthly payouts can top up their Retirement Account to this amount. Payout Age Payout Eligibility Age (PEA) Formerly known as the drawdown age. It has been renamed to differentiate it from the payout start age (see below). This is the age at which CPF members are eligible to receive CPF payouts. It is currently at age 65 years old for members who were born in 1954 or later. Payout Start Age (PSA) This is the age at which CPF members have chosen to start their payouts. For members under the CPF LIFE scheme, they can choose to start their payouts anytime between age 65 and 70. For each year deferred, monthly payouts will permanently increase by 6 to 7 per cent for members under the CPF LIFE scheme. Other Terms Annuity An annuity is an insurance product which provides you with a monthly income for the rest of your life. Annuity Fund/ Lifelong Income Fund The annuity fund, also known as the Lifelong Income Fund, consists of the annuity premium, the interest earned on the annuity premium and the extra interest earned by members on the CPF LIFE Standard Plan. Annuity Premium The annuity premium is the amount of your Retirement Account savings committed to CPF LIFE. Assessable Income (AI) Your AI refers to your total annual income less approved deductions. To work out your AI, we will use the assessment year before the year that we issue your CPF LIFE plan, as provided by IRAS. For example, if we issue your CPF LIFE plan in 2016, we will use your AI for assessment year 2015 (that is, your income for 2014). 21

23 Glossary Term Definition Other Terms Annual Value (AV) The AV of your property refers to how much rent we estimate you could receive each year if you rented it out. To work out the value of your property, we will use the AV of the property stated as your NRIC address as at 31 December before the year we issue your CPF LIFE plan, as provided by IRAS. For example, if we issue your CPF LIFE plan in 2016, we will use the 2015 AV of the property stated in your NRIC as of 31 December Basic Healthcare Sum (BHS) The BHS is the estimated savings that you need for your basic subsidised healthcare needs in old age. It will be set at $49,800 from 1 January 2016 for all CPF members, and will be adjusted yearly in January to keep pace with the growth in Medisave use by the elderly. Once you reach 65, your BHS will be fixed for the rest of your life. Your Medisave contributions will go into your Medisave Account until your balance reaches the BHS. Amounts above the BHS will be automatically transferred to your other CPF accounts to boost your monthly payouts in retirement. Beneficiaries Beneficiaries are the people who you have nominated to receive your CPF savings after your death. If a CPF nomination is not made, upon death, your CPF savings will be distributed by the Public Trustee in accordance to the intestacy laws of Singapore, which ensures that the welfare of your dependants are provided for. Bequest A bequest is the money that you leave to your beneficiaries after your death. The bequest is your unused annuity premium (without interest) and Retirement Account savings, if any. There may not be a bequest if the savings used to join CPF LIFE have been fully paid out in monthly payouts. Property Charge A charge is created when a member uses his CPF savings to finance the purchase of his property and pay his housing loan. The value of the charge is the principal CPF used towards the property plus accrued interest (P+I). Property Pledge CPF members who have no/insufficient property charge can withdraw their Retirement Account savings 11 above the Basic Retirement Sum in cash if they pledge their property. Pledging a property means that when a person sells his property, the amount pledged will go back to his Retirement Account to restore his Full Retirement Sum. It does not affect one s ownership of the property Excludes top-up monies, interest earned and any government grants received

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