02 Feb 2024

7 changes to CPF that you should know

If you’ve only got a minute:

Under the RSS, payouts are now automatically deducted from your OA or SA if RA balance is depleted.
CPF LIFE top-ups are made easier, with inflows automatically channelled to the RA (where applicable) up to the FRS so CPF members will receive higher monthly payouts.
Enhancement of tax-relief caps for cash top-ups to your CPF accounts.

As part of enhancing the overall retirement planning experience, several changes were made to Central Provident Fund (CPF) rules in 2022 enabling beneficiaries to receive CPF monies with greater efficiency.

There are also updates to the tax reliefs available when you contribute to your CPF balances each year and a smoother bequest process of CPF balances.

Here are the 7 changes you should know about:

1. Retirement Sum Scheme payouts

Prior to 2022, monthly payouts under the Retirement Sum Scheme (RSS) would be withdrawn from a member’s CPF Retirement Account (RA) until it was depleted. These payouts were dependent on what they had in their RA and would only last them till the age of 90. Once the RA had been depleted, they would have to transfer funds from their Ordinary or Special Accounts (OSA) to their RA.

From 1Q2022, members who are under the RSS and who have fully withdrawn their RA balances but still have funds in their OSA will automatically receive monthly payouts from their OSA. This applies to members who are not under CPF LIFE.

2. CPF LIFE payouts

Prior to November 2021, CPF LIFE members who receive inflows, such as top-ups or housing refunds had to apply to increase their CPF LIFE premiums accordingly to receive higher CPF LIFE payouts. If they did not do so, it would be paid to them as additional separate monthly payouts outside of CPF LIFE.

From November 2021, these inflows are automatically channelled to their RA up to the Full Retirement Sum (FRS is S$205,800 in 2024). Members then start receiving higher payouts from their CPF LIFE from July 2022.

3. Flexibility to choose which age to transfer OA and SA funds after payout eligibility age

For members who turned 65 (payout eligibility age) prior to Jan 2023, their OA and SA savings will be transferred to their RA, up to their cohort’s Full Retirement Sum.

After Jan 2023, members have the flexibility to decide when this transfer from OA and SA to RA will be, between 65 and 70 years old.

Members continue to have the option to do a transfer from their OA and SA to RA via the Retirement Sum Topping-Up scheme to benefit from the higher interest in RA before they start payouts. There will not be any changes to existing lump sum withdrawals at age 55.

4. Enhanced tax relief cap for voluntary cash top ups

As of 1 Jan 2022, the annual tax relief cap has been increased to S$8,000 (from S$7,000 previously) for cash top-ups to your own CPF Account and an additional S$8,000 (from S$7,000 previously) for cash top-ups for to loved ones’ accounts. This enhanced cap of up to S$16,000 is applicable for top-ups to Special, Retirement and MediSave accounts, subject to terms and conditions.

Additionally, members who contribute to their loved one’s Medisave account will be able to enjoy tax relief. Previously, tax relief was only given to the recipients of Medisave top-ups.

5. Simplification of top-ups to Medisave

From 1 Jan 2022 onwards, Medisave top-ups will only be dependent on the difference between the Basic Healthcare Sum (BHS) and the current Medisave balance of the member.

Prior to the change, members had to consider both the CPF Annual Limit and the BHS, taking the lower of the two to determine their Medisave Account (MA) top-up limits.

The BHS is the estimated savings you need in your MediSave Account for your basic subsidised healthcare needs in old age. For CPF members below age 65, the BHS will be adjusted annually to keep pace with the expected growth in MediSave use by the elderly. This ensures that the BHS will stay relevant for each cohort when they arrive at retirement age.

For CPF members who turn 65 years old in 2024, their cohort’s BHS is S$71,500 and will be fixed for the rest of their lives.

6. Quicker disbursement of CPF monies after a member’s death

From 1 Jan 2022, the period in which CPF monies are retained after a person dies will be shortened to 6 months instead of 7 years after being notified of the member’s death. If monies are not claimed within 6 months, they will be transferred out of the deceased member’s CPF account without any further interest being paid.

For CPF monies of S$10,000 or less that have not been nominated, a single beneficiary will be able to represent all eligible beneficiaries and with their consent, apply to the Public Trustee’s Office (PTO) to receive these monies. As the PTO will only need to verify the information of one family member, this allows the beneficiaries to receive the monies faster.

There is no change for nominated CPF monies, which will be automatically transferred to the qualifying nominees by CPF Board.

From 1 April 2022, nominees with bequeathed Singtel Discounted shares will automatically receive the sale proceeds from the liquidated shares without having to submit any application. Nominated shares will automatically be liquidated 6 weeks after the CPF Board is notified of a member’s death. Nominees still retain their rights to transfer the shares to their CDP accounts before the liquidation if they wish to do so.

7. Government grant recovery if eligibility criteria are no longer met

From 1 Jan 2022, when a member no longer meets the continuing eligibility conditions to receive the Government grants, he or she will have to refund these grants with interest. This prevents people from gaming the system and helps ensure fairness for all.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.