As Singapore’s economy suffers from the Covid-19 pandemic, it seems that more younger Singaporeans are seeing their Central Provident Fund (CPF) as a safe harbour to park their money in.
Working Singaporeans are already made to save part of their salary in the CPF.
However, the Retirement Sum Topping-Up scheme allows them to make voluntary cash top-ups and transfers to their own or their loved ones’ accounts, to increase their monthly payouts when they retire.
Thus, more younger Singaporeans – aged below 35 – have made use of this scheme to top up their CPF for the 1st time in the 1st 9 months of 2020, the CPF Board said.
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According to a press release by the CPF Board on Wednesday (21 Oct), it’s seen a growing number of younger Singaporeans making 1st-time top-ups this year.
It found this when comparing the 1st three-quarters of 2019 with the 1st three-quarters of 2020.
Specifically, it saw a more than 70% increase in the number of Singaporeans below 35 making 1st-time top-ups.
The CPF Board also said one-third of the people who topped up their CPF so far this year were doing so for the 1st time.
Interpreting these results, the CPF Board concluded that the attractive interest rates offered by the CPF, and the value of growing their retirement savings early, are being appreciated by more younger adults.
One of these younger Singaporeans, 31-year-old Mr Chua Mao Jie, said the CPF offers “risk-free interest” that’s higher than any investment he knows of.
He was also quoted by the CPF Board as saying that he has no concerns about hitting the Basic Retirement Sum to ensure a monthly payout, adding that it’s “achievable”.
Thus, he’s decided to top up his CPF every month when he has excess cash, to kickstart his retirement planning.
According to the CPF Board, Mr Chua made his 1st top up at age 26.
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The CPF Board also noticed a 34% increase in the number of top-ups in the 1st 9 months of 2020.
More than 198,000 top-ups were made in this period, compared with a lower number of close to 148,000 in the same period in 2019.
Also, $1.81 billion in top-ups were made from Jan to Sep this year — a 23% rise compared with Jan to Sep 2019.
About $1.47 billion was topped up in that period last year.
One of those who topped up their accounts was self-employed worker Grace Lim, 51.
She feels that it’s more important for the self-employed and singles like her to plan for their retirement.
Thus, she tops up her CPF regularly so that her savings will exceed the Full Retirement Sum when she’s 55 — which for her is in just 4 years.
This way of growing her CPF savings by making use of the high interest will ensure she has a fund for emergencies, she was quoted as saying by the CPF Board.
Not only have more Singaporeans put money into their CPF, fewer older Singaporeans have withdrawn their savings.
In the 1st 9 months of 2020, Singaporeans aged 55 and above withdrew 20% less compared with the same period in 2019, said the CPF Board.
These figures are surprising considering many Singaporeans have seen their income drop due to the Covid-19 pandemic.
Ms Tan Chui Leng group director of retirement income at the CPF Board, said the trust shown in them by Singaporeans is “encouraging”.
By topping up their CPF accounts, or leaving their savings in their accounts, Singaporeans can count on a “stream of retirement payouts” even when times are uncertain, she added.
Top-ups to Singaporeans’ Special or Retirement accounts can be in the form of cash or transfers, and will result in monthly payouts increasing upon retirement.
The trend of choosing to leave more money with the CPF Board is a sure sign of Singaporeans’ trust in the institution of CPF.
While it’s been suggested that Singaporeans in a tight spot should be allowed to prematurely withdraw their CPF, it seems that there are many who prefer to leave their savings for a greater rainy day than even the Covid-19 pandemic.
To top up your CPF account, be sure to do so via the CPF website or myCPF mobile app for it to go in more quickly.
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Featured images adapted from Mimi Thian @ Unsplash and Google Maps.
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