More CPF for older workers is good, but what about financial planning? April 11, 2022
As the proportion of the ageing population in Singapore rises, retirement and retirement savings will increasingly be in spotlight. And when you talk about retirement and retirement savings, financial planning and CPF or the Central Provident Fund, comes into focus.
The Singapore government has been moving steadily over the past few years to ensure that older workers have enough funds for their retirement. The first round of increase to the CPF contribution rates for older workers was implemented at the start of 2022, and in Budget 2022, the government announced that there will be another round of similar increase in 20231.
So, from next year, employers would be required to pay an additional 0.5% to workers aged 55 to 60 and 65 to 70, and an additional 1% to workers aged 60-65, beginning in 2023.
What this means is that for workers aged 55 to 60 the total CPF contribution will increase by 1.5% from the current 28% to 29.5% starting on 1 January 2023. The employee’s share of contribution of the increase is equivalent to 1%, and the employer’s share of contribution is 0.5%.
For workers aged 60 to 65, the total CPF contribution will increase by 2% from the current 18.5% to 20.5% starting on 1 January 2023. The employee’s share of contribution of the increase is equivalent to 1%, and the employer’s share of contribution is 1%.
As for workers aged 65 to 70, the total CPF contribution will increase by 1.5% from the current 14% to 15.5% starting on 1 January 2023. The employee’s share of contribution of the increase is equivalent to 1%, and the employer’s share of contribution is 0.5%.
But increasing CPF contributions is only half of the story. Singaporeans also need financial planning to ensure financial security in their golden years.
Many older Singaporeans are well on their way to ensuring financial security for their golden, but there are many who are not.
According to St. James’s Place Wealth Management Asia (SJP Asia), nearly half (46%) of Singaporeans expect their family to care for them in their retirement.2
The survey also revealed that almost half (48%) of respondents forecast they will not save enough money to sustain the lifestyle they want in retirement. And about 13% believe they will need to work past retirement age owing to a lack of savings, with two-thirds (66%) concerned about being a financial burden to those closest to them.
For them, the good news is that it is never too late to start. So, what can they do now?
For a start, take a health check with regard to your finances. One way to do that would be to visit https://www.phillip.com.sg/sg/financefit/ and get yourself a free customised FinanceFit report.3
The report will give you a customised plan specially tailored to your goals and needs. We make projections of your financial needs based on your current situation and give you an insight into how to utilise your current finances efficiently for your future needs. We understand each individual has his/her unique needs and wants and ideal lifestyle. How to go about attaining them is all about making the right life choices.
You may browse our holistic suite of products and services here or talk to us to find out how we can help you to attain your financial goals and needs.
PhillipCapital also has options for those who want to invest their CPF funds into the markets. To check this out go to: https://www.poems.com.sg/market-journal/5-etfs-you-can-invest-through-cpf-investment-scheme/
There are also options to invest money from your SRS account into the markets. To check this out, go to: https://www.poems.com.sg/market-journal/a-ticket-to-retirement-with-etf-and-srs/
So, what are you waiting for? It’s never too late to start. And as for the best time to start planning, saving and investing, the right time is Now!
Scan here to access FinanceFit :
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About the author
Elston Soares
Elston Soares is an editor with Phillip Securities Research.
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