Based on the CPF Board’s Chart
Will the CPF Minimum Sum be enough to help CPF Members’ future needs?
The CPF Minimum Sum will be locked when you reach 55 for the next 10 years in the Retirement Account(RA) and earned 4% interest p.a. On reaching 65, you are allowed to withdraw on a monthly basis till the amount is depleted.
Example:-
A member reached 55 on 1 July 2009, the Minimum Sum was set at $117,000.
The Interest accumulated plus the Principal Sum on the RA since 1 July 2009, will be at $141,335.32($24,335.32 + $117,000) as of 31 December 2013. As the chart shown, today’s inflation adjustment is at $155,000. A shortfall of $13,664.68 just over 4 years and still has another 6 years more to go before Member reaches 65. On reaching 65, CPF Board allows you to withdraw the Minimum Sum on a monthly basis, you may have another 15 years more to go assuming we live till 80. How much inflation will that be for another 21 years (6+15) from now?
Notable from the chart on the the CPF website, the inflation year on year is much higher than the Minimum Sum set a few years ago. How can Members catch up with the inflation rate with the Minimum Sum set when they reach 55, if the interest rate earned on the RA cannot even match future inflation rates?
Will the CPF Board change the Minimum Sum again when Members reach 65? Or will CPF Board top-up their Members’ RA yearly or increase the interest rate on the RA to match that future year’s inflation as years go by? If the answer is NO, then do you think increasing the Minimum Sum year on year will depreciate our hard earned monies locked in the RA even more?
Do you think based on the above calculation or CPF Board’s Chart without increase the current 4% interest p.a. on the RA to hedge against inflation, our savings today can never catch up 21 years later? (based on the above example)
Minimum Sum Scheme is meant for Citizens’ retirement. That’s why it is locked for long-term use. We should not compare interest rates earned at Commercial Banks.
Why does our Govt not shoulder responsibility for their Citizens to maintain the Minimum Sum at future value on reaching drawdown age of 65 but keep changing the Minimum Sum every year?
What are all our reserves for?
Concerned Member