Since CPF is supposed to be a social security initiative, once contributions to various Central Provident Fund (CPF) accounts are made, the money can be used for various purposes. The purpose can vary from an income after retirement to the purchase of a house or investments and health cover. To facilitate such investments, CPF provides a host of schemes that range from housing to retirement to investment and healthcare. But, before we can take advantage of these schemes, we need to know what they are and how they work. So here is a breakup of the schemes being offered by CPF.
Types of schemes
The schemes offered by CPF can be broken into 6 major categories like retirement, housing, healthcare, investments, self-employed and other schemes. What follows is a brief introduction to each of the individual schemes offered under the major categories.
CPF Retirement schemes:
There are 3 schemes available under this category and they are all meant to ensure that you have a source of income once you retire.
- CPF LIFE: The CPF LIFE scheme offers two plan that pay a monthly income that is based on the amount you have saved up in your retirement account. The scheme also offers these payments under plan, one being the Standard plan and the other the Basic plan.
- Retirement Sum Scheme: Unlike the CPF LIFE scheme, which pays for your entire life, this scheme makes payments only for 20 years from the time you retire. Under this scheme you can expect to receive an estimate of S$ 660 to S$ 1,920 per month based on the savings in your retirement account.
- CPF Withdrawals At 55 Years Old: This is a scheme that allows you to withdraw a specific sum from your CPF accounts once you turn 55 years old. The amount you can withdraw will depend on certain factors such as the year in which you were born, the amount you have set aside for your retirement and the amounts that you have in your Special or Ordinary accounts.
CPF Housing schemes:
The housing schemes offered by CPF are designed to help you with the purchase of a house for yourself. To that end, it offers 3 schemes which are:
- Public Housing Scheme: Under this scheme you can use the amount saved up in your Ordinary account to purchase a house from the Housing and Development Board (HDB). The scheme is available for the purchase of both, a new and a HDB flat that is up for resale.
- Private Properties Scheme: The PPS is a scheme that can be used to fund the purchase or construction of a new private property. The amount made available to you will be up to 120% of the Valuation Limit of the property you are purchasing.
- Home Protection Scheme: If you have purchased an HDB property and are using your CPF savings to pay the instalments, then you will need to the Home Protection Scheme. This scheme makes sure that should you fail to keep monthly payments up to date as a result of the diagnosis of a terminal illness, permanent disability or even your death, you, and your family, won’t end up losing your HDB flat.
CPF Healthcare schemes:
Since medical bills can end up destroying all the savings you may have or land you under a heap of debt, CPF has 4 schemes that you can use to help with the medical bills.
- Medisave: This is a scheme that contributes 8% to 10.5% of your wages into an account known as the Medisave Account. These savings can be used to fund specific medical procedures like operations, day care treatments, etc. not only for you but for your immediate family as well.
- MediShield Life: This is a scheme that has replaced the MediShield scheme. The new scheme offers subsidies on premium payments and cover for all citizens and permanent residents of Singapore. The best part is that there is no application needed to participate in this scheme, everyone is automatically a member of MediShield Life.
- Private Medical Insurance Scheme: Under the Private Medical Insurance Scheme, you will have the option to use your CPF savings to pay for an integrated medical insurance plan. This means that the plan you choose will offer you both the Medisave contribution/cover and any other options provided by the chosen private insurers.
- ElderShield: The ElderShield scheme is something that all members of Medisave automatically become a member of, when they reach the age of 40 years. This scheme will pay S$ 300 to S$ 400 every month for 60 to 72 months depending on the payout option chosen by you.
To help you out with financing your investments, CPF savings can be used for investments in multiple ways. The funds from the Special or the Ordinary Accounts can be used for investing in things like fixed deposits, government bonds, unit trusts, insurance with investment links and even ETFs to name a few. The scheme can also be used to purchase Discounted Singapore Telecom (SingTel) shares but such purchases are subject to conditions.
The Self-Employed Schemes is a mandatory contribution to a Medisave Account by those who are self-employed and have a net trade income that exceeds S$ 6,000 per annum.
Apart from those mentioned above, there are some other schemes also that are offered by CPF that are mentioned below:
- CPF Nomination Scheme: Should the worst happen, you would want to ensure that your CPF savings are distributed according to your wishes. TO make that happen, you are provided with a nomination facility that will ensure that each of your nominees receives exactly what you deem them to receive from your CPF account.
- CPF Withdrawals on Other Grounds: There are various reasons why you may wish to withdraw CPF savings, but not all reasons may be entertained. There are however certain scenarios, like leaving the country or medical grounds, where CPF savings may be made available to you and that is where this scheme comes into play.
- Dependants' Protection Scheme: This is a term insurance scheme that offers a cover of S$ 46,000 right up to the age of 60 years. It gets activated the moment the first contribution to CPF is made and is also an opt-out plan.
- CPF Education Scheme: If you have a relative, be it your child or your spouse or even a sibling, for whom you need to pay the tuition fee then you can apply for a loan based on the savings in the Ordinary account. This scheme is only made available for certain approved courses in approved institutions.
- CPF Contribution for Employees: This is a scheme that governs the contributions made towards CPF by your employers. It also lists out the various allowance that you may be getting from your employers for which CPF contributions might be applicable.
These are some of the main schemes that are offered and operated by CPF. They are all meant to ensure that member of CPF are covered when it comes to medical expenses, the purchase of property or retirement.