CPF’s Matched Retirement Savings Scheme: Top-Up Savings For Your Elderly Parents

Jia Hui

Jia Hui is a content marketer who loves helping others and hopes to make this world a kinder place in any way she can.

Jia Hui

Jia Hui is a content marketer who loves helping others and hopes to make this world a kinder place in any way she can.

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It has been customary for years in Singapore to help out family members financially by adding to your ageing loved ones’ CPF Retirement Account. That said, your elderly folks may now obtain funding from the government by carrying out such a vital step for their golden years.

What Is the Central Provident Fund?

The Central Provident Fund is something that most, if not every one of us who were born and raised in Singapore or who are Permanent Residents, are familiar with. Essentially, the CPF is recognized as one of the top pension plans in the world, and throughout the years, it has gone through a number of reforms with the goal of better ensuring long-term financial stability for Singaporeans and PRs.

The Ordinary Account, MediSave Account, and Special Account are the three main accounts that make up the CPF. The aforementioned accounts may be used for a variety of things, including funding housing costs, healthcare expenses, and, certainly, creating a monthly payouts stream for retirement. This payment is taken out of your pay from employers and serves as a tax relief and is sent to these accounts. Self-employed people are likewise not free from making these donations; the only ones that must be made are for MediSave.

How Knowing CPF Is Vital to Your Parents and Grandparents

When necessary, MediSave can be used to cover the cost of medical care, dental work, MediShield Life premiums, and other necessary expenses. Primarily, two significant CPF milestones happen at the ages of 55 and 65.

The majority of an elderly person’s CPF savings up to that point are transferred into their retirement account when they turn 55. For the next 10 years, until they turn 65, this account increases gradually with an interest rate that compounds of 4.0 to 6.0%. When they are 65 years old, senior folks can choose whether or not to enroll in CPF Life. This is essentially Singapore’s version of an annuity, and participants will get a monthly payment for the duration of their lives. Also, you may assist your parents in making smarter retirement funds decisions by doing your best to comprehend this process.

What Is the Matched Retirement Savings Scheme by CPF?

Through the Retirement Sum Topping-Up Scheme under the CPF’s Matched Retirement Savings Scheme, the government would match all contributions made to eligible seniors’ CPF accounts from 2021 to 2025, dollar for dollar.

It is intended to assist elderly Singaporeans who lack the necessary retirement funds to reach the Basic Retirement Sum. The MRSS, which began in 2021, may be available to your elderly loved ones’ retirement savings if they match the requirements and are between the ages of 55 and 70. For such a retirement savings scheme, MRSS seeks to assist older Singaporeans who have not yet met their Basic Retirement Sum in increasing their retirement funds. Up to a maximum of $600 annually, the governing body will reimburse every dollar added to your senior parents’ CPF retirement account in cash.

Function of MRSS: How Does It Work?

Check to see if your senior recipient qualifies for the aforementioned dollar-for-dollar matching program first or explore the CPF guide for MRSS for further information. Considering that the care recipient’s CPF balance is less than the Basic Retirement Sum of $93,000, be careful to verify. Then, add money to the CPF accounts of your seniors. Starting the first quarter of the year that ensues, the matching grant is going to be immediately placed in the elderly recipient’s retirement account as monthly retirement payouts.

In 2021, we’re going to suppose you contribute $600 to your parent’s CPF Retirement Account, then during the first quarter of the year that follows, the state will deposit an extra $600 into their CPF Retirement Account predicated on the enhanced retirement sum.

Eligibility and Criteria of MRSS

For senior Singaporeans who have not yet reached the current Basic Retirement Sum, there is the MRSS. Based on the MOH eligibility notice, the only people who are qualified for this program are those who have not yet attained the current BRS.

The complete qualifying requirements for the Matched Retirement Savings Scheme are as follows:

  • Singaporean national
  • age range of 55 to 70, inclusive, as of the evaluation year’s 31st December
  • savings from retirement accounts are lower than the existing BRS.
  • a significant portion of senior workers make less than $4,000 a month on average.
  • the majority of HDB flats fall within the $13,000 annual maximum value of a home.
  • owning just one property

Regardless of whether you are ineligible, your elderly relatives could be, and this is an exceptional opportunity to assist them in making up lost time in their retirement savings. Although the top-ups are done by someone else, they can still profit from MRSS if they are qualified for the program.

Benefits of CPF Top Up with MRSS

Along with the government matching transfers dollar for dollar, your seniors could also enjoy the following extra benefits:

  • High CPF interest rates, at least 4%, are earned on contributions
  • Runs concurrently with the CPF LIFE plan for retirement benefits
  • Tax reductions of up to $14,000 per year if you fill up with cash

Given the low-interest rates that banks are paying, even if the Matched Retirement Savings Scheme has a ceiling of $600 per year, you could be interested in thinking about adding more regardless.

Additionally, the CPF interest rates, that is more appealing than ever, will benefit your senior’s contributions. A delectable 4% annual interest rate plus an extra 1% on the first $60,000 is offered on retirement accounts for people 55 and over. It merely is roughly as high as it goes for a senior citizen who likely has a reduced risk tolerance.

How to Top Up Your CPF Matched Retirement Savings Scheme

Typically, MRSS top-ups can be made at any time of the year for qualified persons. Additionally, you can accomplish this by making smaller monthly top-ups or a one-time payment of up to S$600 every year. Top-ups, however, may only be made with cash.

Additionally, you may do this using the CPF mobile app, myCPF online services, and GIRO for yourself, ageing parents, other relatives, and indeed anybody as long as they are qualified.

Matched Retirement Savings Scheme & CPF Life

The existing CPF LIFE program, which provides lifetime payments for the rest of your life, is compatible with and operates concurrently with the Matched Retirement Savings Scheme. Given that your senior relatives are not automatically enrolled in CPF LIFE, they can choose to join the program at any point earlier than the age of 80 if they were born in 1958 or later and have no less than $40,000 or $60,000, subject to age, in their RA.

The following describes how CPF LIFE operates:

  • The Special and Ordinary Accounts will combine to create a Retirement Account after you reach 55.
  • Retirement Account withdrawals over the Basic or Full Retirement Amount are permitted.
  • Anyone can begin their CPF LIFE plan at any age between 65 and 70.
  • The remainder of the RA amount will now be applied to a lump sum premium for CPF LIFE.

As for those individuals who are registered in CPF LIFE, the number of funds in their retirement account will decide the dividends they get.

Is the CPF Retirement Account Better than Giving Allowance to Your Parents?

Even while there are several advantages to topping out your parents’ CPF RA, only certain individuals may be able to do so. The most obvious option for elderly parents who need immediate financial assistance is to give an allowance. The payment boost from topping a RA could fail to make sense for those that have little or no CPF savings because it will be spread out over their entire life. That said, providing your parents with a monthly stipend will alleviate their immediate financial requirements and worries.

Despite the fact that the CPF LIFE payment may ultimately be substantially bigger if your ageing loved ones are significantly younger than 65, they could not see or get the money until a great deal later. Considering how well-versed in CPF they are, it can be difficult to persuade them of the advantages of topping up their CPF account rather than only providing them an allowance.

Can I Get My Money Back if I Want to Cancel a Top-Up?

Transfers of cash top ups and CPF transfers are permanent, and because funds are locked in for a lengthy period of time in RAs and SAs, they receive an interest rate that is greater than 4% annually. This refers to how the market works, where fixed deposits are locked in for greater interest rates than savings accounts that may be withdrawn.

Several things might happen if the person who received the top-up passes away:

  • Cash top-ups done on or following November 1, 2008, will be considered as a monetary gift for the recipient, and any outstanding cash top-ups will be given to the senior’s nominees in accordance with their CPF nomination.
  • The remainder of a cash top-up that was made prior to November 1, 2008, will be returned to the giver’s OA. If they have passed away, the top-up fund will be distributed to the donor’s nominees in accordance with the donor’s CPF designation.
  • Any money that was moved from the recipient’s account as a result of a CPF transfer from the person who contributed will be restored to the providers’ original CPF accounts.

Likewise, a long-term approach to making sure your parents are at ease and adequately prepared for retirement may be to make the most of their CPF savings. Nevertheless, it is also crucial to maintain their MediSave account as it might include support with hospital bills, outpatient surgery costs, as well as the demands of senior group homes and healthcare for the elderly.

Retire Genie offers caregiving services at every level of your ageing relatives’ needs in elderly apartments in Singapore. Maintain the interest of your senior folks in being active with our skilled care staff can offer companionship, nursing services, nighttime caring, home treatment, and even more.

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Your elderly support services, now easily accessible anytime and anywhere in Singapore you are. You can ease your worries knowing that help is always on the way. Download our app today and try it for yourself!