Central Provident Fund

Singapore

Presented by

Ms Fiona Chan

Deputy Director, Member Education

CPF Board, Singapore

October 2008

Presentation Outline

Introduction to Central Provident Fund

Creating Informed CPF Members Who Undertake Retirement Planning

CPF Board’s Financial Literacy Programmes

CPF BOARDTo enable Singaporeans to save

for a secure retirement

Central Provident Fund

Savings

Pension Size (end 2007)Fund Size 2007 : US$95b (S$137b)

All working Singaporeans & Permanent Residents contribute to CPF savings

Contribution rates between 34.5% and 10% (Employers: 14.5% to 5%, Employees: 20% to 5%)

Contribution ceiling capped at US$3,200 (S$4,500)

Central Provident Fund

Savings

Population – 4.6 million

CPF members – 3.16 million

“Active members” – 1.55 million

(refers to those with any CPF contribution over the

last 3 months)

Average balance* for active members

US$106,000 (S$148,028)Above data as of end-2007

*Refers to regrossed balances including amounts withdrawn for housing, investments & education

Central Provident Fund

Savings CPF Savings

Can be used by CPF members for housing, healthcare, investments, insurance, and education.

Retirement

Balances in excess of the Minimum Sum (currently about US$76,000, adjusted early) can be withdrawn at age 55

Minimum Sum paid out to members over a 20-year period from age 62 (to gradually raise to 65)

CPF system currently being tweaked to include compulsory annuity for eligible groups (launch date 2013)

Need For

Financial Education

Changing demographics – a fast ageing

population

Erosion of CPF savings ie. unwise

investments, excessive expenditure on

housing

Heavy reliance on CPF savings for retirement

Population not quite prepared to undertake

early retirement planning

Ageing Population &

CPF Members1985

0.9%

3.0%

10.1%

11.0%

9.6%

7.4%

4.2%

3.9%

2.9%

2.0%

2.2%

0.3%

3.3%

8.7%

9.3%

7.7%

5.5%

2.8%

2.4%

1.5%

0.7%

0.6%

14% 12% 10% 8% 6% 4% 2% 0% 2% 4% 6% 8% 10% 12% 14%

Unspecified

Under 20

20 - 24

25 - 29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 and above

Ag

e g

ro

up

s

CPF members (%)Male (%) Female (%)

2007

0.5%

1.6%

3.1%

4.0%

4.7%

5.3%

6.8%

7.2%

5.9%

4.4%

7.9%

0.1%

1.7%

3.2%

4.1%

4.8%

5.3%

6.0%

6.1%

5.2%

4.0%

8.3%

10% 8% 6% 4% 2% 0% 2% 4% 6% 8% 10%

Unspecified

Under 20

20 - 24

25 - 29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 and above

Ag

e g

ro

up

s

CPF members (%)Male (%) Female (%)

Complacency In

Retirement Planning

MoneySENSE Financial

Literacy Survey 2005

Only 24% of Singaporeans actually calculatedhow much they need for their retirement

Many still underestimate the amount of fundsneeded for retirement

42% had the misconception that their CPFSavings at retirement will provide them withfunds equivalent to their last drawn salary

Singaporeans need help with theirfinancial literacy!

CPF Board’s

Financial Literacy Programmes

Our Education Programme

Starting PointMembers know and understand:

Their own retirement goals & needs(desired retirement age, funds to last x years, how

much they need to save, etc)

The need to start early retirement planning

How to optimise & grow CPF savings

DestinationAt point of retirement (at desired age),

CPF members have set aside:

the required CPF Minimum Sum

Private savings to supplement CPF monies

Education on

De-cumulation Phase•How to make the CPF

Minimum Sum lasts longer

•How to ensure not to outlive

your savings

Education on

Accumulation Phase•How to get there

•What to start doing now

•What are the check

points/milestones

my cpf – Different Strokes

for Different Folks

12 main life events, each combining different CPF schemes

and services, serve citizens at different stages

of their lives.

Regular Newsletters

In The Newspapers

Regular Talks & Seminars

Online Self-Help Portals

& Calculators

Bring Retirement Planning To

Both Young & Old through

Events

What Works

Targeted Messaging ie. segmentation by life events

Engaging a variety of channels, especially online media

Provide self-help tools ie. online calculators & one-stop portals

Strategic partnerships – create strong ties with like-minded partners

Key Learning Points

Simplify & simplify messaging

(use of cartoons helps)

Constantly gathering feedback on programmes to gauge effectiveness & to improve

Providing “actionable” tips – ie. topping up the CPF accounts or transferring monies between accounts to take advantage of extra interests

Thank You!