With the recent budget 2022, there are several major changes in the CPF scheme for all Singaporeans and PR. You should be aware of these as they will potentially impact you.
1. Increased tax relief from $7,000 to $8,000 per year on cash top-ups
The tax-relief cap on CPF cash top-ups to your own Special Account (SA), Retirement Account (RA) or Medisave Account (MA) used to be $7,000. It will now be raised to $8,000. This means you can do more voluntary top-ups to your CPF accounts and enjoy higher tax-benefits. This applies to top-ups of your loved ones like your spouse, parents and children too.
2. Increase of CPF contribution rates by up to 2% for those aged 55 to 70
For older workers between 55 to 65, they will need to contribute 1% more of their salary to their CPF and employers will contribute an additional 1% as well. For workers between 65 to 70, they will contribute a similar 1% more while employers will contribute an additional 0.5%. So for workers between 55 to 70, expect to take home 1% less in income as you will find it in your CPF instead.
3. Annual increase of the Basic Retirement Sum (BRS) and Basic Healthcare Sum (BHS)
To keep pace of inflation, the BRS and BHS are revised annually and for those who turn 55 this year in 2022, their BRS is $96,000, Full Retirement Sum is $192,000 and Enhanced Retirement Sum is $288,000. The BHS is set at $66,000.
4. Automatic drawdown of CPF OA and SA accounts if RA account is exhausted for members not on CPF Life
This should apply only to a very small handful of older people. But for those who are currently not on CPF Life, their monthly payouts from CPF will stop when their RA account is exhausted. But with this change, if they still have money in their OA or SA accounts, these funds will be automatically drawn down to keep the monthly payouts going.
5. Automatic increase in CPF Life payouts when RA is increased
Previously, members will need to apply to increase their CPF Life payouts when they have additional funds flowing into their RA like top-ups and housing refunds. With this change, CPF Life payouts will be automatically adjust to take into account the additional funds in the RA and members do not need to apply to increase their CPF Life payouts.
6. Reduced restriction on Medisave top-ups
In the past, one can only do voluntary Medisave top-ups subjecct to the CPF Annual Limit and the BHS. So if you hit the cap of the CPF Annual Limit that year, and your Medisave is still not at the BHS yet, you still cannot do any further voluntary top-ups of your Medisave. But with this change, as long as your Medisave has not hit BRS, you can still top-up.