UNDERSTANDING
CPF
3 Facts About Your CPF Account
Central Provident Fund (CPF) is what most Singaporeans will think is like another bank account that is used for their retirement in the future or is just that 20% of your wages being put aside every month.
Well here is some information that you might have not known about CPF. Hence here are 3 things about CPF:
1. It is actually a total of 37% of monthly salary contributed to your CPF account.
Well, to be fair it is actually 20% by you as an employee and 17% from your employer. So to make a rough calculation, if you earn a gross salary of $2,500 per month, you will be contributing a total of 37% x $2,500 = $925 monthly.
But this contribution rate only applies if you are 55 and below. In conclusion, it is not 37% all the way. Hence that leads to my second point.
2. Your contribution rate changes when you grow older.
After the age of 55, your contribution rate will slowly decrease. The table below shows the contribution rate.
*taken from the CPF website
If you realize the changes apply when you are reaching your retirement age and it is not surprising why it is created in this way.
One point of view is that might be due to the ever-changing working environment and also the cost of living in Singapore. The elderly find it almost impossible to not be working in order to support themselves thus the rates of contribution are lowered in order for potential employers to hire them and not to use much expenses in paying for the employees CPF contribution.
3. Other than housing and retirement, how else can I utilize my CPF monies.
As you might already know, CPF has 3 different accounts; Ordinary, Special and Medisave Account. Most Singaporeans knows that their CPF can be used for their housing and retirement but let me share with you the other functions as well.
It is very vague in terms of all the words that are in each table hence it will be discussed in the next few articles of 3 Things About. For now, that’s the end of this article.
That comes to the end of this article. Hope that this is beneficial for you and do share it with your family and friends. Till next time.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
