We have an update for the CPF Full Retirement Sum (FRS) for year 2021 and 2022. Basically, the Basic Retirement Sum (BRS), FRS, and Enhanced Retirement Sum (ERS) serve as guideposts in helping us to plan our paths to retirement. More importantly, they will determine how much we get as monthly payouts at our payout eligibility age.
While many others focused on different issues .. Buried in one of the articles of Singapore Budget 2020 is a nugget of information that updated the following table, which was what we knew prior to today.
The focus was supposed to be the Matched Retirement Savings Scheme being introduced to help those with less Central Provident Fund (CPF) savings. About 435,000 lower- to middle-income Singaporeans aged 55 to 70 who have not been able to set aside the prevailing Basic Retirement Sum will be eligible for the scheme, and it involves the Government matching every dollar of cash top-up made to a person’s CPF Retirement Account, up to an annual cap of $600.
According to DPM Heng Swee Keat at today’s budget speech (click for Business Times article) – “the Basic Retirement Sum will continue to increase by the same 3 per cent per year for the next two cohorts. This means that for Central Provident Fund (CPF) members who turn 55 in 2021, the sum will be set at S$93,000. It will be S$96,000 for those turning 55 in 2022.”
CPF Minimum Sum
What we know as the CPF Full Retirement Sum today, was first introduced in 1987 as the CPF Minimum Sum. This was until the review of the Central Provident Fund (CPF) system was done in 2015 and CPF changes were introduced. Increasingly, people started using the new terms instead, although the “minimum sum” is still valid and understood by many.
This little bit of history is why even today, many people still refer to it using its historical name of CPF Minimum Sum.
CPF Full Retirement Sum 2021 and 2022 – New Table
OK – I sort of jumped the gun a little bit, because technically there wasn’t any mention of FRS. Since FRS is always equivalent to twice of BRS (I will gladly update the post if proven otherwise), we can safely assume the FRS numbers are accurate and that this would represent an increase of $5,000 (2.76%) for 2020-2021 and an increase of $6,000 (3.23%) for 2021-2022.
Unless the calculation has changed, otherwise my assumption would be correct and the updated table would therefore look like this :
worshipers supporters 😛 would no doubt find this piece of information helpful and exciting.
Interestingly, 2022 is also my target age (big-four-zero) for Barista FIRE / Coast FIRE / Slow FIRE (well, if it happens heheh) so this piece of information came at the right time and will probably help out with planning. I on the last day of 2019 and plan to continue working + saving + investing for the next three years. Maybe hit ERS? Let’s see what would be the BHS for 2021 and 2022 🙂
[Update 20-Feb-2020] CPF Board has updated its website to reflect the numbers, which look exactly as my table above.
CPF is a divisive topic
It is no secret that CPF is a highly divisive topic in Singapore. Love it or hate it, there is simply no getting away from it. As an engineer, my goal is simple – make good use of it.
At the end of the day, what we want to achieve is to craft a comprehensive retirement plan. If you are not sure where to start, it essentially means when we reduce our retirement plans to its irreducible minimum, we must have these three things:
- You must have a fully paid house.
- You must have a good medical expense insurance.
- You must have a lifelong stream of income.
With CPF, it has already set the solid foundation for all three criteria to flourish. Check out my blueprint for financial independence for more ideas on CPF and more 🙂
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