Singapore a sovereign state and island country which is located at the southeast Asia. Has a reasonable population of working class people? The government through the ministry of man power thought of the later retirement life of the employed both in the public and private sector. They come up with a retirement scheme which will cater for health, retirement and housing issues at ago.
The central provident fund is a compulsory fund for each person in employment. The saving scheme instigates on the onset of employment and is deducted on the first salary for both employer and employee’s side. The scheme covers both Singaporeans and the permanent residents. There is a mandatory fee to contribute which is saved and withdrawn at the retirement age.
This fund comes in handy to the citizens as they can buy homes after working years with what they have saved. The money is pooled together by the central provident fund board working under the ministry of manpower.
The fund was officially established by the British colonial authorities residing in Singapore in the year 1955. The scheme basically assisted retired workers helping them live better even in non-working year. The fund continued getting popularity and the authorities adding up other benefits like health and housing benefits. This has remained to date and has been of great help to all employees.
The account is divided in to three accounts as follows: note the first two accounts will form the retirement account when they attain the retirement age.
|CPF accounts||Interest rates|
What are the ages to withdraw the amount?
The saving account allows one to start withdrawing at the age of 55 years. However, to receive the monthly payouts the age has to be 65 years. this being the common retirement ages in many countries.
Note employees attaining the retirement age of 55 years, will have their ordinary account and special account converted to retirement account which will give the retirement total amount.
The CPFB has given a limit to how much should CPF contribution amount to be taken this is $6,000 only above this nothing should be dedicated. Example if an employee earns $10,000 only $6,000 of the salary should be calculated and rate deducted from the amount.
Employers also give a contribution of 17% to top what the employee contributed. Let’s check at the ages which determine what contribution you should give.
|Age||Employers percentage of the salary||Employee percentage of the salary||Total percentage of the wage|
|55 and below||17%||20%||37|
|Above 55 to 60||13%||13%||26%|
|Above 60 to 65||9%||7.5%||16.5%|
With the above table lets pick 55 years old employee assuming he/she earns $6,000
The employee percentage is 20% meaning the employee will give $1,000
Taking home $5,000.
The employer is to part with 17% thus adding to the employee’s sum $850
So each month the employee saves $1850 which is calculated yearly and increasing in rates as set by the board by retirement age.