If you are about to turn 55, you might have already started planning about how you will be using the payouts you will receive from your CPF during your years of retirement. But did you know that you can still continue to maximise your retirement funds? With the Retirement Sum Topping-Up Scheme (RSTU), you can not only increase your own retirement savings, but also help your loved ones grow their retirement savings.
As mentioned above, this scheme has been designed to help you build your own or your loved ones’ retirement savings. You can do this by simply transferring your CPF funds or cash to your own/your loved ones’ Special Account (if the recipient is below 55) or Retirement Account (if the recipient is 55 or above). While an ordinary savings account offers interest rate of up to 3.5% p.a., the Special Account and the Retirement Account can give you up to 5% p.a. and 6% p.a. interest, respectively.
Better interest rates: Your savings in the Special Account and Retirement Account can get you up to 6% interest p.a., compared to your ordinary savings account which gives a guaranteed interest rate of just 2.5% p.a.
Here’s how you can earn up to 6% interest: Your savings in the Special Account and Retirement Account will give you minimum interest of 4% p.a. In addition to that, you can earn an extra 1% p.a. on the first S$60,000 of your combined CPF balances, including up to S$20,000 that comes from your Ordinary Account. Now, with effect from 2016, you are eligible to earn an additional 1% p.a. on the first S$30,000 of combined CPF balances, if you are aged 55 or above.
Enjoy lifelong monthly payouts with CPF LIFE: When you retire, you always run the risk of running out of your savings. With CPF LIFE, this risk can be minimised. CPF LIFE provides you with lifelong monthly payouts, if you were born in 1958 or after and if you are having a minimum amount of S$60,000 in your Retirement Account six months before you become eligible for payouts. When you meet these conditions, you are automatically put on CPF LIFE.
In case you don’t meet the criteria for CPF LIFE, you can still apply for it. You will have to make the application at any time after you reach your payout eligibility age, but at least a month before you turn 80. CPF LIFE provides you with a regular monthly income until death.
Enjoy higher earnings during your retirement years: Every single dollar that you save in your Special Account or Retirement Account will grow year after year, thanks to compound interest. So, the earlier you start making CPF Transfers, the better it is.
You can transfer your Ordinary Account savings to your own Special Account or Retirement Account to earn up to 6% p.a. interest. If you are below 55, you can transfer only your Ordinary Account savings. However, if you are 55 or above, you can transfer all of your Special Account savings, as well as all of your Ordinary Account savings.
If you wish, you can transfer your CPF savings to your spouse’s Special or Retirement Account. You can only transfer the amount that is left after setting aside the Basic Retirement Sum (BRS).
Transferring your CPF savings to your spouse’s account can help him/her earn more in monthly payouts. Remember: the scheme allows you to earn an extra 1% interest on the first S$60,000 on a member’s combined CPF balances. So, if your spouse’s CPF account balance is less than S$60,000, you can transfer your balance, after setting aside your BRS, to his/her account.
Before transfer: Assume you have S$126,000 in your CPF savings and your monthly payout (from 65 years age) is S$1,080. Your wife has S$40,000 in her CPF savings and her monthly payout (from 65 years) is S$380.
After transfer: Assume you transferred S$43,000 to her CPF account. Now, after the transfer, you have S$83,000 in your CPF savings and your monthly payout is S$750. Your wife has S$83,000 in her CPF savings and her monthly payout increases to S$700. So, with CPF Transfers, your spouse can also enjoy better monthly payouts.
The other loves can be your parents, parents-in-law, siblings, grandparents, and grandparents-in-law.