Increase in CPF and Medisave Minimum Sums to $198,500 may far exceed mandate given for such raise

By: SY Lee and Leong Sze Hian

Minimum Sum increased to $155,000

The CPF Board and Manpower Ministry (MOM) said in a joint statement on May 4 that the CPF Minimum Sum will be raised to $155,000 for Singaporeans who turn 55 between July 1 this year and June 30 next year, up from $148,000. The Government agencies reasoned that the increase was needed to maintain the Minimum Sum’s real value over time and to account for inflation.

Inflation 2.4%, but minimum sum increased 4.7%?

Our question is, “since for the whole of 2013, CPI-All Items inflation averaged 2.4 per cent, sharply lower than the 4.6 per cent in 2012 – Why is it that the minimum sum is being increased by 4.7%?”

Medisave Minimum Sum increased by 7.4% to $43,500?

Similarly, why is the Medisave Minimum Sum being increased by a whopping 7.4%, from $40,500 to $43,500?

No debate in Parliament?

As we understand, the mandate to increase the minimum sum was supposed to end last year – shouldn’t such an important issue as to whether it should continue to increase – be debated in Parliament?

How many have $198,500?

How many Singaporeans who reach age 55 will have $198,500 in their CPF? About 1 in 8 Singaporeans?

Minimum Sum target exceeded by $40,202?

We believe that the original mandate to increase the Minimum Sum to $120,000 in 2003 dollars was for the Minimum Sum only. Now, with the inclusion of the Medisave Minimum Sum – the total sum of $198,500 to be retained at age 55 may already far exceed it.

Since “the $155,000 Minimum Sum is equivalent to $117,500 in 2003 dollar terms” – the equivalent of $120,000 in 2003 dollars is now $158,298. So, the sum total of $198,500 may already be $40,202 in excess of the original minimum sum target mandated by Parliament about a decade ago.