|
|
|
The Board would like to remind CPF members of the
following changes to CPF which will take effect from 1 January 2005. |
|
These changes had been previously announced by the
Government in 2002 and 2003. The changes are summarised in
Annex A for easy reference. |
|
LOWER CPF CONTRIBUTION RATE FOR
WORKERS AGED ABOVE 50 TO 55 |
|
From 1 January 2005, the CPF
contribution rate for workers aged above 50 to 55 will be reduced
from the current 33% to 30%. The employer contribution rate will
be reduced from the current 13% to 11%. |
|
The employee contribution rate will be
reduced by 1 percentage point to 19%. The 3% reduction in CPF
contributions will come from the Ordinary Account, i.e.
contributions to the Special and Medisave Accounts would remain at
7% and 8% respectively. |
|
This contribution rate will be further
reduced to 27% from 1 January 2006. |
|
The lower employer CPF contribution
rate will enhance the wage competitiveness of older workers and
help them become more employable. The reduced employee
contribution will also help increase the take home pay of older
workers. |
|
CPF members who have difficulty
meeting the shortfall in their monthly housing instalment as a
result of the change in CPF contribution will be allowed to use
their Special Account savings to meet the shortfall. |
|
LOWER SALARY CEILING FOR CPF
CONTRIBUTION |
|
The salary ceiling will be reduced
from $5,500 to $5,000. This is to give high-income earners greater
flexibility in managing their finances, including their retirement
needs. It also reduces the compulsory savings for this group of
workers and lessens the burden on employers. |
|
The salary ceiling will be further
lowered to $4,500 on 1 January 2006. |
|
ADDITIONAL WAGE CEILING |
|
The Additional Wage Ceiling will be
revised. The maximum amount of wages that will attract CPF
contributions in 2005 will be $85,000. The maximum Additional
Wages that will attract CPF is the difference between $85,000 and
the total ordinary wages subject to CPF contributions for the
year. |
|
MEDISAVE CONTRIBUTIONS FOR THE
SELF-EMPLOYED |
|
The maximum amount of compulsory
Medisave contributions payable by the self-employed for 2005 will
be adjusted, following the change in the salary ceiling. See
Annex A for details. |
|
MEDISAVE MINIMUM SUM |
|
From 1 January 2004, CPF members who
turn 55 and are able to meet the CPF Minimum Sum are required to
set aside a Required Amount in their Medisave Account when they
make a CPF withdrawal. The requirement for members to set aside
the Required Amount in their Medisave is to enable members to have
enough savings to meet their healthcare needs during old age. |
|
From 1 January 2005, the Required
Amount will be raised from $2,500 to $5,100, after adjusting for
inflation. The Required Amount will increase by $2,500 (in 2003
dollars) each year until it reaches $25,000 (in 2003 dollars) on 1
January 2013. |
|
If members have less than the Required
Amount in their Medisave Accounts, they can use the balances in
their Ordinary and/or Special Accounts in excess of the Minimum
Sum to top up the Required Amount. This includes first withdrawals
by CPF members at age 55 and all subsequent withdrawals. |
|
Members who wish to check their
Medisave balance upon reaching age 55 years may log on to the
CPF website with
their SingPass. |
|
HOUSING WITHDRAWAL LIMIT |
|
The cap on the CPF withdrawal limit
for the purchase of private residential properties and HDB flats
financed with bank loans will be reduced from the current 144% to
138% of the Valuation Limit, and thereafter cut by 6 percentage
points every year to reach 120% on 1 January 2008. |
|
This is to encourage prudence in using
CPF savings to buy a house so that members will have enough
savings in their CPF accounts to meet their retirement needs. |
|
TOP UP CPF MINIMUM SUM BEFORE YEAR
END |
|
As announced previously, all cash
top-ups made under the CPF Minimum Sum Topping-Up Scheme will
enjoy a tax relief of up to $7,000 instead of $6,000 per year from
2004. |
|
In order to enjoy the tax relief,
members are reminded to top up their loved ones’ CPF accounts
before the end of the year. To avoid the year-end rush, members
should submit their cash top-up applications by 28 December 2004. |
|
The CPF Minimum Sum Topping-Up scheme
was first introduced in 1987 with the objective to encourage
Singaporeans to contribute to the financial security of their
loved ones. These top-ups can be in cash or from members’ CPF
Ordinary Accounts. |
|
The tax relief for cash contribution
is applicable to those who top up their own Retirement Accounts,
and/or the accounts of their non-working spouses, parents and/or
grandparents who are aged 55 and above. |
|
Those who are topping up for their
non-working spouses should note that the recipient must be 55
years and above and earn $2,000 or less in the preceding year. |
|
More details of the Topping-Up scheme
are available in the
online Minimum Sum Scheme handbook. |
|
Public Enquiries |
|
For more details, please log on to
www.cpf.gov.sg or call the CPF
Call Centre at 1800 - 227 1188. |
|
More.....Annex A |
|
Source:
Central Provident Fund News
Release 17 Dec 2004 |
CPF changes from 1 January 2005
