A scheme which aims to help CPF members set aside sufficient savings to support a modest standard of living during retirement. All CPF members are required to set aside the Minimum Sum when they turn age 55 and pensioners may apply for exemption from the Minimum Sum.
Options To Meet The MSS Requirement
- When a member reaches age 55, the Minimum Sum that he sets aside is kept in a Retirement Account.
- Setting aside this Minimum Sum amount is a requirement and the amount increases by $4,000 on 1 July each year until it reaches $120,000 (in 2003 dollars) in year 2013, and will be adjusted yearly for inflation.
- (New) The Minimum Sum currently stands at $106,000 (for the period 1-7-2008 and 30-6-2009).
- (Old) The Minimum Sum currently was at $94,600 (for the period 1-7-2006 to 30-6-2007).
- instead of withdrawing the savings in their OA or SA Accounts which they are entitled to, they may request for them to be transferred to the Retirement Account to make up to the Minimum Sum amount. However, such a transfer is irrevocable;
- they can pledge their properties up to 50% of the Minimum Sum (For 1 July 2006 to 30 June 2007, the maximum limit that one can pledge his property is up to a maximum of $47,300);
- they can use their future CPF contributions (i.e. if they are working after age 55) to make up the shortfall in the Minimum Sum;
- they can top-up their Retirement Account by cash.
Members are given the following three options to invest their Minimum Sum when they turn age 55:
- buy a life annuity from a participating insurance company;
- keep it with a participating bank; or
- leave it with the CPF Board.
Buying a life annuity is the best choice amongst the three options because the monthly payment will continue for as long as the annuitant is alive. As for the other two options, once the Minimum Sum is fully utilised, the monthly payment will be discontinued.
Option For Combined MSS For Married Couples
They can opt to set aside a combined Minimum Sum of 1.5 times the Minimum Sum provided they nominate each other as the beneficiary for the balance of their Minimum Sum. Once the nomination is made, it cannot be revoked. Should one of the account holders die, the deceased’s Minimum Sum would be transferred to the surviving spouse’s Retirement Account to make up the full Minimum Sum. Any excess amount will be paid in a lump sum to the surviving spouse as nominee of the money.
Commencement Date Of Monthly Payout
For members who reach age 55 before 1 January 1999, the Minimum Sum monthly payout will commence from age 60 and for those who reach age 55 on or after 1 January 1999, the Minimum Sum monthly payout will commence from age 62 .
Retirement Age Determined At Age 55
The retirement age is based on the one prevailing at the time a member turns 55 years old. This means to say that whenever the legislated retirement age is changed, it will only affect those who are below 55 years old.
Minimum Sum Plus Scheme (MSPS)
Members who are age 55 and above on or after 1 January 2001 can use the balance in their CPF savings in the Ordinary and Special Accounts as well as Medisave Account in excess of the Medisave Minimum Sum, beyond the Minimum Sum to buy Life Annuities. This is an extension of the Minimum Sum Scheme and is optional. Members who have set aside the full Minimum Sum amount as well as the Medisave Minimum Sum amount may make use of this scheme to buy life annuities when they are eligible for CPF withdrawal.
Topping Up The Minimum Sum
It is intended to help individuals (CPF and non-CPF members) set aside money for their own, their spouses’, parents’ or grandparents’ old age needs. The eligibility criteria for this scheme are as follows:
- both parties (i.e. the applicant and the recipient of the top-up) must be Singaporeans or Singapore Permanent Residents;
- the recipient of the top-up should be at least 55 years old;
- the party whose money will be used for the top-up must have more than 1.5 the prevailing Minimum Sum amount in their Ordinary and Special accounts, including amount withdrawn for investments
- the amount of top-up must not exceed the maximum limit allowed under the scheme
- members must follow the guidelines on the use of cash and/or CPF savings for the topping up
Person* Whose Account Will Be Topped Up | Using CPF Savings | Using Cash |
Self |
| X |
Spouse | X | X |
Parents | X | X |
Grandparents |
| X |
* Must be Singaporeans or Permanent Residents of Singapore
From the above table, it can be seen that members may top-up their own as well as their grandparent’s Retirement Accounts using cash only. As for spouse and parents, they may do so using both cash and CPF savings.
Tax Treatment
MSS: All monthly tax payments are tax free.
MSPS: Amount is also tax free. However if the annuity is discontinued, money will be returned to member and no more exemptions for subsequent investments.
Top Up:
- Member who used cash to top up their parents’ or grandparents’ Retirement Account can also claim tax relief up to $7,000 per calendar year for the amount of cash top-up subject to the topping up limits.
- Member will also qualify for the relief if the member has made a top-up in cash for his/her non-working spouse who is 55 years old or older and whose income does not exceed $2,000 in the year preceding the year of top-up.
- Topping-up of accounts through transfer of funds from the member’s own CPF account to that of his/her own or spouse’s, parent(s)’ or grandparent(s)’ retirement account will not qualify for deduction.
- The Minimum Sum (or its balance) will be paid out in a lump sum to his CPF nominees
- If there is no nomination, the money would be channelled to the Public Trustee for distribution according to the law of intestacy
- Upon death of the member, the remaining balance in annuity or bank deposit would be transferred back to CPF to be distributed to the CPF nominees
- In the case of topping-ups by children or grandchildren, the money will be returned proportionately (based on the amount contributed) to the children’s or grandchildren’s respective CPF Accounts
- For the combined Minimum Sum cases where an irrevocable nomination had been made, the deceased’s Minimum Sum would be transferred to the surviving spouse to make up the full Minimum Sum for the surviving spouse
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23004
Q: Can I claim tax relief if I use cash to top up under the Minimum Sum Topping-Up Scheme?
A: You can enjoy tax relief of up to $7,000 per calendar year, if you use cash to top up for yourself and/or receive cash top-ups from your employer. You can enjoy an additional tax relief of up to $7,000 per calendar year if you use cash to top up for your siblings, spouse, parents or grandparents. To qualify for tax relief for cash top-ups for siblings/spouse, the sibling/spouse must have earned $2,000 or less in the preceding year. For cash top-ups made in the year, you can claim tax relief in the following year’s Tax Assessment.
CPF INVESTMENT SCHEME (CPFIS)
- The CPFIS comprises the CPF Investment Scheme–Ordinary Account (CPFIS-OA) and CPF Investment Scheme-Special Account (CPFIS-SA).
- The purpose of these two schemes is to give CPF members more options to enhance their retirement savings through investments.
- Currently, the CPF Board pays a guaranteed minimum interest of 2.5% per annum and 4% per annum on the Ordinary and Special Accounts respectively.
- at least 21 years old;
- not undischarged bankrupts; and
- have savings in their Ordinary or Special Accounts
- List Of Investment Instruments Allowed Under CPFIS And The Investment Limits
- Buying And Selling Of Investments From Service/Product Providers Under The CPFIS
- Mode Of Premium Payment For Life Insurance Products
- Admission Criteria for Funds Seeking to be Included under CPFIS
| Instruments | Investment Limits |
| The full balance in the Ordinary Account |
| Up to 35% of investible savings |
| Up to 10% of investible savings |
Types Of Investment Instruments And Amount Of Savings Allowed Under CPFIS-OA
| Instruments | Investment Limits |
| The full balance in the Special Account |
Mode Of Premium Payment For Life Insurance Products. With effect from 1 January 2001, the CPF Board has discontinued the practice of allowing members to use their CPF savings to purchase regular premium policies. Policies taken after this date have to be paid by single premium or recurring single premium. The insurance coverage is limited to three times the single premium paid. Members who had purchased regular premium policies before 1 January 2001 are allowed to continue with their policies on a regular premium payment basis.
Admission Criteria for Funds Seeking to be Included under CPFIS
From 1 Feb 2006, new funds must meet the following criteria for inclusion under CPFIS:
- Top 25 percentile in their global peer group
- Expense ratio lower than median of existing CPFIS funds in its risk category
- Preferably have a track record of at least three years
- CPF Board will publish on its website a list of funds which meets these criteria.
| PFIS-OA | CPFIS-SA |
| Need to open an investment account with DBS/OCBC/UOB | No need to open account. Service Provider will liaise with CPF |
| Sales proceeds will be credited into Investment Account and if inactive for 2 months, money will be transferred to OA | Sales proceeds automatically transferred to SA |
| Profits cannot be withdrawn | Same |
| No need to make good loss | Same |
| Profits and interest earned are not taxable but dividend is taxed at individual tax rate | Same (since shares are not allowed, hence no dividend) |
| Guaranteed interest at 2.5% | Guaranteed interest at 4% |
Release Of Investment Holdings Upon Member Reaching Age 55
- A member’s investments will be released to him when he withdraws his CPF savings at age 55 after setting aside the Required CPF Minimum Sum and Medisave Required Amount.
- If he is unable to set aside the Required CPF Minimum Sum and Medisave Required Amount, his investments will not be released to him.
- Upon liquidation of the investments, the proceeds will be credited to his CPF Investment Account for CPFIS-OA or Special Account for CPFIS-SA.
- Up to half of all his new contributions (including his proceeds from the sale of investments) will be transferred to top-up the shortfall in his Retirement and/or Medisave Accounts when he applies to withdraw his CPF savings.
- Investment Management Association of Singapore (IMAS)
- Life Insurance Association (LIA), and
- Security Investors Association of Singapore (SIAS)
- When members die (irrespective of whether they were undischarged bankrupts or not), CPF investments and any cash held in their CPF investment account under the CPFIS-OA, as well as investments held under CPFIS-SA, form part of the deceased members’ estate and will be distributed according to applicable laws.
- These investments cease to be protected from deceased members’ creditors under the CPF laws and may be used to satisfy creditors’ claims in accordance with the Probate and Administration Act.
- This applies whether the deceased member is an undischarged bankrupt or not.
The SRS was introduced by the government on 1 April 2001 as a voluntary scheme to encourage working individuals to save for their retirement, over and above their CPF savings, i.e. it complements the CPF scheme.
Eligibility Criteria
- Singaporeans, PRs and foreigners;
- at least 21 years old;
- not undischarged bankrupts; and
- not of unsound mind.
- All SRS contributions and withdrawals must be made in cash only
- Only single premium and recurring single premium polices are allowed
- Life cover (including total and permanent disability benefits) capped at three times the single premium
- Plans can allow for contribution continuation feature/benefit upon disability
- Other types of life insurance, such as Critical Illness Insurance, Health Insurance and Long-term Care Insurance policies are not allowed under the scheme
- SRS investments cannot be used as a collateral
- SRS balance is not protected from creditors
- Flexibility on frequency of contributions and the selling of investments
- Withholding tax is imposed on all SRS withdrawals by foreigners and PRs
- A participant is not allowed to contribute to SRS after he has started to withdraw from his SRS account at or after retirement, or after he has reach the prevailing statutory retirement age, whichever is earlier
Summary Of SRS Regulations Pertaining To Withdrawal Of SRS Savings
| Situation | Max period* allowed for withdrawal | Amount of withdrawal subject to tax | 5% Penalty |
| On or after the prevailing statutory retirement age at the time of first contribution | 10 years** | 50% | No |
| Before the prevailing statutory retirement age at the time of first contribution | N.A. | 100% | Yes |
| Upon Death | N.A. | 50% | No |
| Upon permanent incapacity or on medical grounds 10 years | 50% | No | |
| Bankruptcy | N.A. | 100% | No |
| FULL withdrawal by a foreigner who has maintained his SRS account for at least 10 years from date of first contribution | N.A. | 50% | No |
* Period may be longer if the statutory retirement age has been increased.
** 10-year period does not apply to investments in life annuities. 50% tax concession will apply to annuity streams in perpetuity.
Similarities Between CPFIS And SRS
- both are voluntary schemes;
- both have eligibility criteria;
- investment returns accumulated are tax free except for dividends which are taxed at the individual tax rate (Note: Shares are not one of the CPFIS-SA instruments, hence, no dividend issues where this scheme is concerned);
- life insurance cover (including total and permanent disability benefits) is capped at three times the single premium;
- most financial instruments (except fixed deposits*) do not guarantee investment return;
- both allow investment in single premium and recurrent single premium products including annuities.
Differences Between CPFIS And SRS
| CPFIS-OA | CPFIS-SA | SRS |
| Limits are only set on investments in stock and gold. Members can invest up to the balances in their OA in professionally- managed products allowed under the CPFIS-OA scheme | No limits set on the amount of savings in the SA account that can be used for investment | Sets limits on the amount of contributions that may be made to SRS Account per year |
| Can only use the savings in the OA for investment | Can only use the money in the SA for investment | Can use earned employment income (excluding directors’ fees) as well as income from self-employment for participation in the SRS |
| Members need to open an investment account with one of the approved agent banks | Members need not open any investment account | Participants need to open an SRS account with one of the SRS operators |
| Can only maintain one investment account at any one time | Not applicable | Can only maintain one SRS account at any one time |
| Members may buy and sell their investments through the service/product providers allowed under the scheme | Members may buy and sell their investments through the service/product providers allowed under the scheme | Participants may buy and sell their investments from any financial institution |
Members may buy and sell their investments through the service/product providers allowed under the scheme | Members may buy and sell their investments through the service/product providers allowed under the scheme | Participants may buy and sell their investments from any financial institution |
Can only purchase investment instruments approved under the scheme | Can only purchase investment instruments approved under the scheme | Can purchase any investment instruments available in the market |
Withdrawal of profits is not allowed | Withdrawal of profits is not allowed | Withdrawals allowed at anytime |
| Not applicable | Not applicable | Penalty charge imposed on early withdrawal |
| No charges imposed on the operation of the investment account (Transaction fees and service charges may be imposed by agent banks) | Not applicable | May need to pay charges for operating the SRS account |
Withdrawals are tax-free, with the exception of dividends received which are taxable at individual tax rates | Withdrawals are tax-free | Withdrawals on or after retirement (prevailing retirement age at first contribution), 50% of the amount withdrawn will be subject to tax |
Not applicable | Not applicable | Withdrawal before the statutory retirement age prevailing at first contribution, 100% of the amount withdrawn is subject to tax |
Not applicable | Not applicable | Withholding tax imposed on withdrawals by foreigners and Singapore Permanent Residents based on the rate prevailing at the time of withdrawal |
Investments cannot be assigned, pledged or used as collateral for any loan purposes | Investments cannot be assigned, pledged or used as collateral for any loan purposes | SRS account balance cannot be used as collateral, security or guarantee for any financial transaction outside the SRS |
Investments will form part of the deceased’s estate except for insurance | Investments will form part of the deceased’s estate except for insurance and fixed deposits | Investments will form part of the deceased’s estate |
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