What Is CPF and How Can I Use It?

Like it or not, the facts and figures are very real:
Number of Singaporeans 65 or older…

Supporting and caring for a rapidly aging population will be an increasing strain on Singapore’s younger generations. Today, 10 economically active persons are supporting one elderly. By 2030, only 3.5 persons will be supporting one elderly! Therefore, it is important that you plan early for a secure retirement.

Your social security savings plan
The Central Provident Fund (CPF) is a comprehensive social security savings plan which has provided many working Singaporeans with a sense of security and confidence in their old age.

The overall scope and benefits of the CPF encompass the following:

Retirement
Healthcare
Home Ownership
Family Protection
Asset Enhancement

Working Singaporeans and their employers make monthly contributions to the CPF and these contributions go into three accounts:

Ordinary Account – the savings can be used to buy a home, pay for CPF insurance, investment and education.

Special Account – for old age, contingency purposes and investment in retirement-related financial products.

Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance.

Your CPF savings earns interest. Savings in the Ordinary Account earn a minimum interest rate of 2.5% per annum, while savings in the Special and Medisave Accounts earn additional interest of 1.5 percentage points above the prevailing Ordinary Account interest rate.

Securing your retirement
It is important to plan the use of your CPF savings to ensure the following:

• Sufficient savings to see you through your retirement
• A property that is fully paid-up when you retire
• Sufficient savings to meet your medical needs in your old age

Your CPF will provide you with a retirement income to meet your basic needs in old age. Members are encouraged to supplement their retirement income with their personal savings.To ensure that you have a roof over your head when you retire, map out your finances carefully when you buy a home. Buy a home that you can afford so that your home will be fully paid-up when you retire.

Saving for future medical expenses is important as the need for medical care increases significantly as you grow older. Use your Medisave wisely by staying in affordable wards when hospitalised. You should also stretch your healthcare dollar by buying medical insurance such as MediShield. This will help you to meet the treatment expenses for prolonged or serious illnesses.

This information is provided by CPF Board. If you are looking for someone to discuss on how to make your CPF grow faster and bigger, how to stretch your health care dollar by buying insurance such as Medishield, how to invest your CPF OA and SA for retirement, and if you are buying house and need advise regarding financing your house using CPF. You can call our consultant at hp 91059260 Jack Lan for a free consultation session.