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A slew of moves to boost retirement adequacy for Singaporeans will either kick in or ramp up in 2024.
Lower- and middle-income Singaporeans born in 1973 or earlier will receive various top-ups to their Central Provident Fund (CPF) accounts to help them in retirement under the Majulah Package.
The package includes the Earn and Save Bonus – an annual top-up of between $400 and $1,000 as long as a senior person remains in the workforce.
Regardless of their employment status, those whose CPF balances have not reached the Basic Retirement Sum (BRS) will receive a one-time Retirement Savings Bonus of between $1,000 and $1,500 through the package.
The package’s third component is a one-off MediSave Bonus of between $500 and $1,000 to offset healthcare costs.
More details on the package will be announced in Budget 2024 on Feb 16.
CPF contributions are also on the cards for cabbies, private-hire car drivers and freelance delivery workers who use apps.
In a major move to uplift more than 73,000 platform workers here, CPF contributions will be made mandatory for workers aged below 30 in 2024 and companies that provide them with gigs, while older workers can opt in to the scheme.
Contributions will be increased in steps from the latter half of 2024 till 2028.
The CPF monthly salary ceiling, which caps the quantum of ordinary wages that would attract CPF contributions, rose from $6,300 to $6,800 on Jan 1, 2024.
On the same day, CPF contribution rates for senior workers aged 55 and above to 70 years increased by 1 to 1.5 percentage points.
Why it matters
The Earn and Save Bonus – plus accumulated interest over time – aims to help seniors who do not yet meet their BRS to close the gap faster.
Associate Professor Walter Theseira of the Singapore University of Social Sciences (SUSS) said those in the age group targeted by this bonus are generally either working or still capable of work, but also often have fairly low CPF savings.
“CPF savings are likely to be particularly low for women, who were often full-time homemakers in this generation, or for those working in informal work which was more common in the past.
“The Earn and Save Bonus will encourage them to engage in formal work during this last part of their working lives, which will make a difference to their retirement income,” said Prof Theseira.
“If we assume that the youngest qualifying senior receives $1,000 per year for 15 years until the CPF Life draw-down age of 65, the cumulative sum of this stream earning 4 per cent per annum in either the Special Account or Retirement Account would be $20,024,” noted Professor Benedict Koh from Singapore Management University.
Meanwhile, the maximum payout for the MediSave Bonus is expected to cover four to five years’ worth of withdrawals for chronic diseases for Singaporeans in need.
Prof Theseira said the CPF changes for platform workers will likely lead to lower burden on family members and society to support their retirement, while improving housing affordability for younger platform workers too.
Meanwhile, the increased salary ceiling will likely impact workers who already have substantial CPF savings, and is instead an adjustment based on the prevailing cost of living or wages, he added.
Mr Christopher Gee of the Institute of Policy Studies (IPS) said the policy changes are coming now and at an accelerating pace to address the implications of Singapore’s rapidly ageing population on retirement adequacy, especially of those with less accumulated savings.
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