CPF, short for Central Provident Fund, is the primary government-regulated savings plan that helps Singaporean citizens and Permanent Residents manage their retirement, housing and health-related necessities. As such, there are various schemes that are available under healthcare, retirement and housing. Depending on individual necessities, Singaporean citizens and Permanent Residents can opt for those that correspond to their interests.
Topping-up of one’s CPF account is a common practice that is followed in Singapore. As a matter of fact, one of the greatest benefits of topping up one’s CPF account, besides having enough funds for retirement or housing, is tax relief. Many Singaporeans go on to top up their CPF accounts to enjoy the benefit of paying lesser towards tax than they would have needed to.
Various Aspects of the CPF Top-up Relief
As far as topping up your CPF account is concerned, most Singaporeans and Permanent Citizens top-up under the existing Retirement Sum Topping-Up Scheme launched by the Singapore government. The scheme is particularly designed to help you and your loved ones increase monthly CPF pay-outs after retirement and enjoy a higher level of financial security.
Let’s take a brief look at the various aspects that are involved in topping-up your CPF Account.
How Do You Top Up Your CPF Account?
Well, the government gives you the opportunity to top up your CPF account through certain means. Let’s take a look:
Through the transfer of funds:
You can effect a top-up of your CPF account by transferring funds directly to your account. However, the top-up will not be eligible for a tax relief under current government norms if you transfer money from your own existing CPF Account to the account of your Family members or your Special Retirement Account.
As such, if you qualify for the top-up, you can directly transfer funds from your bank account and be eligible for tax reliefs.
Making Top-ups To Other Recipients
As mentioned earlier, you can make cash top-ups to recipients other than yourself i.e. grandparents, parents, siblings or your spouse. On making a cash top-up you can enjoy relief from tax to the tune of up to S$7,000 if you are making a top-up to your own account, and an additional S$7,000 if you are making a top-up, to maybe say, the accounts of your family members.
However, if you wish to top-up the accounts of your siblings or your spouse, they must meet the following eligibility parameters:
- They must be handicapped
- Their income should not exceed S$4,000 in the financial year that precedes the top-up year.
Note: Making a top-up to the accounts of your parents, in-laws or grandparents does not require specific eligibility criteria to be met.
Qualifying for a CPF Top-Up
First of all, in order to top-up your CPF account you are required to qualify for the same i.e. the option to top up your CPF account should be available to you. Basically, the top-up option is mostly given to encourage more Singaporeans to be better placed during retirement or have better access to funds for healthcare and housing. So, in order to qualify for the CPF Top-Up, the following parameters need to be met:
- You must hold a valid NRIC identity proof.
- Either you or your employer has made a cash top-up to your account in the preceding financial year under the Retirement Topping-Up CPF Scheme. The top-up should either have been made to your Special Account or Retirement Account.
- A cash top-up under the scheme made to account of your parents, spouse and siblings in the preceding financial year is also good enough to qualify.
Earning Interest On Your Cash Top-up
In your ordinary account, your CPF savings will earn an interest of 2.5% p.a. Savings in your MediSave account and SA and RA accounts earn a higher percentage of interest – 4% p.a. The amount in your OA account also earn an interest of 1% p.a.