Central Provident Fund
The Central Provident Fund was established in 1955 to provide financial and living security for retirees and those who are unable to work. The fund is a comprehensive social savings scheme that meets the healthcare needs of the people, supports their living expenses after retirement, assists in housing purchases, and provides educational insurance.
Under the regulations of the fund, both employers and employees are required to contribute. Holders of Employment Passes and Work Permits are exempt from contributing to the fund. For Singaporean citizens under the age of 55 and permanent resident employees who have resided for more than two years, the employee's monthly contribution is 20%, while the employer must contribute 12%. For permanent resident employees, the contribution in the first year is 3%, with the employer contributing 5%; in the second year, the employee contributes 9%, and the employer contributes 15%. Thereafter, contributions will be made at the normal rates. The government has gradually planned to restore the employer contribution rate to the original level of 20%.
Central Provident Fund Accounts
Central Provident Fund accounts are divided into three types: Ordinary Account, MediSave Account, and Special Account:
1) The deposits in the Ordinary Account can be used to purchase residential properties, such as Housing and Development Board new flats and private houses. Additionally, they can be used to purchase insurance, such as family insurance and dependent insurance. Members can also invest their deposits in approved stocks, bonds, unit trusts, fund management, and gold. The deposits in the Ordinary Account can also be used to fund tuition fees for the tertiary education of children or themselves. It can also be used to pay tuition fees for full-time degree and diploma courses at all six local tertiary institutions.
2) MediSave Account: The deposits in the MediSave Account can be used for hospitalization expenses for members, spouses, children, parents, and grandparents, provided that their grandparents are Singapore citizens or permanent residents. Additionally, Central Provident Fund members can use the deposits in this account to pay premiums for the "MediShield Life" insurance plan. This insurance plan ensures that members can afford substantial medical expenses when they require long-term hospitalization or treatment due to serious illness.
3) Special Account: The deposits in the Special Account will be kept in the account for retirement, old age, and emergency needs.
Central Provident Fund Interest Rates
Generally, the savings interest rate for Central Provident Fund account holders corresponds to market interest rates. However, under the protection of the Central Provident Fund regulations, account holders are guaranteed a minimum interest rate of 2.5%. For longer-term savings plans, higher interest rates may be additionally earned.
Central Provident Fund Withdrawals
Account holders may withdraw funds from their Central Provident Fund accounts upon reaching the age of 55. However, regulations stipulate that a minimum balance must be maintained in the account as basic security for old age. In addition to being able to withdraw funds at 55, withdrawals can also be made in cases of permanent departure from Singapore or in situations of total permanent disability and mental incapacity. On the other hand, if members continue to work after the age of 55, they may withdraw funds every three years thereafter, specifically at ages 58, 61, or 64, etc.
