During the recent Budget 2022 speech, the government announced that the Basic Retirement Sum (BRS) will increase by 3.5% annually between 2023 to 2027. The Full Retirement Sum (2 x BRS) and Enhanced Retirement Sum (3 x BRS) will also increase correspondingly. This is intended to help ensure Singaporeans have sufficient retirement funds with higher CPF Life payouts from the increased BRS.
For the average Singaporean, hitting the higher Basic Retirement Sum (BRS) and Full Retirement Sum (FRS) may feel like even more of a stretch as cost of living increases. With most of us choosing to use our bulk of CPF funds in Ordinary Account (OA) for our housing needs, most of our CPF contributions may not be available to help hit the FRS when we reach the age of 55, especially if we choose to pledge our property and only set aside the BRS. Only the CPF funds in our Special Account (SA) are ringfenced for retirement.
Is it possible for average Singaporeans to hit the Full Retirement Sum (FRS) by the age of 55 just by using their Special Account? We run the figures to find out.
Read Also: BRS, FRS, ERS: Why There Are 3 CPF Retirement Sums & Why They Increase Every Year
Average Singaporean Income Was $4,000 In 2021
The median income in 2021 was $4,000 excluding employer CPF or $4,680 including employer CPF. For this article, we would be using the median income excluding employer CPF as the monthly wage. MOM also provides the median income information by age group.
| Age | Median Gross Monthly Income From Work (Excluding Employer CPF) ($) |
| 15 – 19 | 1,000 |
| 20 – 24 | 2,329 |
| 25 – 29 | 3,500 |
| 30 – 34 | 4,500 |
| 35 – 39 | 5,308 |
| 40 – 44 | 5,958 |
| 45 – 49 | 5,200 |
| 50 – 54 | 4,500 |
| 55 – 59 | 3,277 |
| 60 & Over | 2,400 |
| Total | 4,000 |
Source: MOM, Labour Force In Singapore
Only Special Account (SA) Contributions Are Ringfenced For Retirement
While our CPF monies are meant for retirement, they are split across 3 accounts before the age of 55: Ordinary Account (OA), Special Account (SA) and Medisave Account (MA). Funds in our SA are ringfenced entirely for our retirement, while funds in OA and MA can be used for housing and healthcare respectively.
Given that most Singaporeans would tap on their OA for housing and MA is set aside for our healthcare needs, we would assume that only SA contributions will grow to form the basis of our Full Retirement Sum.
How Much Will Our Special Account Contributions Grow By The Age of 55?
Assumptions:
- We earn the median income of our age group throughout our lifetime.
- We start contributing at age of 20.
- We stop contributing after age of 54.
- For simplicity of calculation, the interest earned is computed at the end of the year. This computation is lower than CPF’s actual interest computation. CPF interest is computed monthly. Contributions received this month start earning interest next month, instead of at the end of the year.
- Of the first $60,000 CPF balances that earn additional 1% interest, $20,000 of SA is earning that additional interest.
| Age | Monthly Median Income ($) | Monthly CPF Contribution ($) | Allocation To SA (Monthly) ($) | Annual SA Contribution ($) | Interest on SA Contributions From Preceding Year ($) | Cumulative SA ($) |
| 20 | 2,329 | 862.00 | 139.73 | 1,676.76 | 1,676.76 | |
| 21 | 2,329 | 862.00 | 139.73 | 1,676.76 | 83.83 | 3,437.35 |
| 22 | 2,329 | 862.00 | 139.73 | 1,676.76 | 404.56 | 5,518.67 |
| 23 | 2,329 | 862.00 | 139.73 | 1,676.76 | 487.81 | 7,683.24 |
| 24 | 2,329 | 862.00 | 139.73 | 1,676.76 | 574.40 | 9,934.40 |
| 25 | 3,500 | 1,295.00 | 209.91 | 2,518.92 | 698.13 | 13,151.45 |
| 26 | 3,500 | 1,295.00 | 209.91 | 2,518.92 | 826.81 | 16,497.18 |
| 27 | 3,500 | 1,295.00 | 209.91 | 2,518.92 | 960.64 | 19,976.74 |
| 28 | 3,500 | 1,295.00 | 209.91 | 2,518.92 | 1,124.78 | 23,620.44 |
| 29 | 3,500 | 1,295.00 | 209.91 | 2,518.92 | 1,306.96 | 27,446.32 |
| 30 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 1,534.25 | 32,219.25 |
| 31 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 1,772.89 | 37,230.82 |
| 32 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 2,023.47 | 42,492.97 |
| 33 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 2,286.58 | 48,018.23 |
| 34 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 2,562.84 | 53,819.75 |
| 35 | 5,308 | 1,964.00 | 318.36 | 3,820.32 | 2,882.00 | 60,522.07 |
| 36 | 5,308 | 1,964.00 | 318.36 | 3,820.32 | 3,217.11 | 67,559.50 |
| 37 | 5,308 | 1,964.00 | 318.36 | 3,820.32 | 3,568.99 | 74,948.81 |
| 38 | 5,308 | 1,964.00 | 318.36 | 3,820.32 | 3,938.45 | 82,707.58 |
| 39 | 5,308 | 1,964.00 | 318.36 | 3,820.32 | 4,326.39 | 90,854.29 |
| 40 | 5,958 | 2,204.00 | 357.26 | 4,287.12 | 4,757.07 | 99,898.48 |
| 41 | 5,958 | 2,204.00 | 357.26 | 4,287.12 | 5,209.28 | 109,394.88 |
| 42 | 5,958 | 2,204.00 | 357.26 | 4,287.12 | 5,684.10 | 119,366.10 |
| 43 | 5,958 | 2,204.00 | 357.26 | 4,287.12 | 6,182.66 | 129,835.88 |
| 44 | 5,958 | 2,204.00 | 357.26 | 4,287.12 | 6,706.15 | 140,829.15 |
| 45 | 5,200 | 1,924.00 | 311.88 | 3,742.56 | 7,228.58 | 151,800.29 |
| 46 | 5,200 | 1,924.00 | 311.88 | 3,742.56 | 7,777.14 | 163,319.99 |
| 47 | 5,200 | 1,924.00 | 311.88 | 3,742.56 | 8,353.12 | 175,415.67 |
| 48 | 5,200 | 1,924.00 | 311.88 | 3,742.56 | 8,957.91 | 188,116.14 |
| 49 | 5,200 | 1,924.00 | 311.88 | 3,742.56 | 9,592.93 | 201,451.63 |
| 50 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 10,234.51 | 214,924.82 |
| 51 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 10,908.17 | 229,071.67 |
| 52 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 11,615.51 | 243,925.86 |
| 53 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 12,358.22 | 259,522.76 |
| 54 | 4,500 | 1,665.00 | 269.89 | 3,238.68 | 13,138.07 | 275,899.51 |
| 55 | 13,794.97 | 289,694.48 |
* allocation for SA computed based on CPF Contribution Calculator
Based on this computation, by the time we reach age 55, our SA would accumulate to around $289,700. This is more than sufficient to hit the current FRS of 192,000 and even hits the ERS of $288,000. However, the current FRS is only for cohorts who are aged 55 this year.
For those of us who are below the age of 55, the increase in BRS and thus FRS means that this may not be sufficient. Assuming that the BRS continues to increase by 3.5% after 2027, those cohorts who turn 55 after 2034 may not be able to reach the FRS with their SA contributions alone, if there is no contribution increase.
| Year | BRS | FRS |
| 2023 | $ 99,400 | $ 198,800 |
| 2024 | $ 102,900 | $ 205,800 |
| 2025 | $ 106,500 | $ 213,000 |
| 2026 | $ 110,200 | $ 220,400 |
| 2027 | $ 114,100 | $ 228,200 |
| 2028 | $ 118,000 | $ 236,000 |
| 2029 | $ 122,100 | $ 244,200 |
| 2030 | $ 126,300 | $ 252,600 |
| 2031 | $ 130,700 | $ 261,400 |
| 2032 | $ 135,200 | $ 270,400 |
| 2033 | $ 139,900 | $ 279,800 |
| 2034 | $ 144,700 | $ 289,400 |
| 2035 | $ 149,700 | $ 299,400 |
*italicised is projected BRS and FRS
We Can Boost Our SA Contributions
The above computations should be taken as a reference instead of reality. This is because our real wages would differ from the assumptions used. Even if we do earn the median income over our lifetime, wages can increase over time. The annualised change to our real income was 2.1% p.a. between 2016 and 2021, according to MOM.
Still, it is assuring to know that based on median income, it is possible to fully accumulate the Full Retirement Sum with just our Special Account contributions alone. In the case that we fall behind in our SA contributions (e.g. our incomes are lower or we started contributing later), we can boost our SA savings by making voluntary contributions, such as through the Retirement Sum Topping Up Scheme (RSTU).
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