2. The Enhanced Retirement Sum (ERS), which is the maximum savings that can be set aside in the RA, will be raised to four times the Basic Retirement Sum, up from three times. That means the ERS will be S$426,000 in 2025, up from S$308,700 in 2024.
What this means: This could mean you will earn lower interest rates on your remaining SA funds that exceed the Full Retirement Sum since these will flow to the lower-yielding OA, which earns 2.5 per cent per year compared with the SA’s 4.08 per cent interest rate.
That’s unless you choose to voluntarily transfer your OA balance into the RA, which also has an interest rate of 4.08 per cent.
The closure of the SA also gets rid of a little-known “shielding” hack that allowed some savvy CPF members to maximise their interest earnings.
What they did was to “shield” the bulk of their SA savings by investing them a few weeks before their 55th birthday, only to sell the investments off afterwards so that the money flows back to their SA.
That way, their OA balance will be used to fund their RA, and they get to keep their money in their higher-earning SA.
3. From 2025, cash top-ups that attract the Matched Retirement Savings Scheme will no longer grant income tax relief. This scheme provides dollar-for-dollar matching grants for senior Singaporeans who have yet to meet the Basic Retirement Sum.
What this means: If your parents or grandparents have yet to hit the Basic Retirement Sum, you will no longer enjoy tax relief for the first S$2,000 that you top up to their RA. You can still get up to S$8,000 in tax relief for subsequent top-ups to their RA.
That said, if you’re providing for your loved one’s retirement, it still makes financial sense to continue doing so even without the relief. Let’s say you need to contribute S$4,000 to your mom’s retirement pot each year. You can top up S$2,000 to her CPF, and the government will match the other S$2,000, versus giving her S$4,000 in cash.Â
*Bear in mind that the cap on the matching grant is up to S$2,000 a year, with a lifetime cap of S$20,000
Renting a flat while waiting for your BTO
Eligible young families who require housing while waiting for their Build-To-Order (BTO) flats will get further assistance in the form of a one-year rental voucher under the Parenthood Provisional Housing Scheme (PPHS).
What this means: We don’t yet know the dollar amount of this voucher, but we know that it is meant to allow eligible families to rent an HDB flat in the open market.
The Housing and Development Board (HDB) currently offers subsidised housing under the PPHS. Rentals for two-room flats are between S$400 and S$550, and three-room flats are between S$600 and S$900.
As it stands, the PPHS is available only to couples with a monthly household income of S$7,000 or below. These rentals are highly sought after, and married couples with a child are given priority, so the vouchers could help alleviate the high demand.
Already, some property experts and agents are worried that landlords will start charging higher for rent, knowing that tenants have vouchers to use. But we’ll have to wait for the details of the voucher and its eligibility criteria to get greater clarity on the scheme’s impact.
