CPF Retirement Sum Scheme

55 is a milestone age for many Singaporeans as we all look forward to cashing out our hard-earned CPF savings accumulated through decades of hard work. But before you rejoice, it is important to understand the CPF Retirement Sum Scheme.

This is because the amount of cash you can take out may be vastly different from what you had been dreaming of all along. There might be heart pain. There could be disappointment, or even bitterness.

To put things into perspective, Central Provident Fund (CPF) is Singapore’s social security system and over the years, it has evolved to cover not just our retirement needs, but also housing, medical and education purposes. Despite these, the central tenet of CPF is still to ensure that Singaporeans save enough for retirement.

Since the CPF Retirement Sum Scheme is so important, have you ever really sit down and figure out what is it all about?

I was curious about CPF Retirement Sum Scheme and recently tried to gain a better understanding of the retirement policy. Boy, I was nearly blown away! The framework was indeed complicated. No, I am not exaggerating because if you read carefully and make the effort to think deeply, you would realize that the CPF Retirement Sum Scheme is actually not as simple as you thought it should be.

CPF Retirement Sum

CPF Retirement Account

When you reached 55, your Ordinary Account will be combined with Special Account to form a newly created Retirement Account (RA), up to the Full Retirement Sum (FRS). What does this mean? [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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4 thoughts on “CPF Retirement Sum Scheme

  • March 20, 2018 at 9:48 am

    Hi Gerald, you have explained this so well!

  • March 20, 2018 at 3:36 pm

    Hi Siew Gek,

    Thank you for your comment and appreciate very much for signing up as SG Wealth Builder member.
    Let me know if there is any topic you wish to cover.


  • March 22, 2018 at 1:23 pm

    Hi Gerald,

    Is it a must to join CPF LIFE for those born in 1958 and thereafter? And when?

    Will it show the balance in the account after each monthly payout? Where will the balance go after the person passed away? Thanks.

  • March 22, 2018 at 3:52 pm

    Hi Leonid,

    The CPF LIFE is an opt-out scheme. This means if your Retirement Account hit the minimum amount, then you will be automatically included in the scheme. You may choose to opt out only if you have purchased your own annuity or got medical conditions.

    Regarding the monthly payout, I think you may have a misunderstanding on how CPF LIFE works. Basically unlike Retirement Sum, CPF LIFE is actually a risk-pool scheme.

    What happens is that by 55, a sum of money will be set aside to buy CPF LIFE annuity. The sum of money is known as annuity premiums. You get the monthly payouts only 10 years later, at age 65.

    Between 55 to 65, there would be interests generated on the annuity premiums. This interest would be used to pay those surviving members in the scheme.

    Previously, I wrote an article on CPF nomination. The balance of Retirement Sum and unused annuity premiums will go to the nominees, excluding the interests earned on the annuity premiums.

    Hope the above clarifies. Do you wish me to write a detailed article as you are a member of SG Wealth Builder?


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