FROM Jan 1 next year, Central Provident Fund members can make cash top-ups to the CPF accounts of their parents-in-law and grandparents-in-law as well.
This extends the list of family members to whose accounts they can contribute. Now, they can do so only for their spouse, siblings, parents and grandparents.
These voluntary contributions enjoy tax relief but only for a collective top-up amount of up to $7,000.
These top-ups to the Special or Retirement accounts of their parents-in-law and grandparents-in-law can be made from the savings in members' Ordinary Accounts. But they must first meet the minimum sum requirement of $131,000.
The tax relief is only for cash top-ups.
The extension of the Minimum Sum Topping-Up Scheme to cover members' parents-in-law and grandparents-in-law was announced yesterday by Minister of State for Manpower and National Development Tan Chuan-Jin at a retirement conference. It was organised by the Life Insurance Association of Singapore and the Singapore Actuarial Society.
The move will let members boost their loved ones' savings, 'especially for parents and grandparents who may not have saved enough for retirement', he added.
Last year, only 45 per cent of CPF members who turned 55 met the minimum sum, which is set at a level that supports a modest standard of living in retirement, said the CPF Board on its website.
Mr Tan's announcement came on the heels of a pledge made by Deputy Prime Minister Tharman Shanmugaratnam during last month's Budget Debate. Noting that the number of top-ups was 'not large', Mr Tharman said the Government was thinking of ways to 'improve and simplify the current schemes'.
Latest CPF Board figures show there were 22,100 top-ups totalling some $105 million made by CPF members to their parents' and grandparents' accounts last year. While the number of top-ups rose from 17,600 in 2010, the amount dipped from $110 million. There are 1.74 million active CPF members.
In his speech yesterday, Mr Tan said CPF is enough for a 'basic retirement standard of living'. It caters 'fully' to the retirement needs of the lower middle income and 'significantly' for the middle-income group. Home ownership is also important, he noted, as owners can rent out rooms for income or sell remaining flat leases to the Government.
Several MPs welcomed the move. Mr Yeo Guat Kwang, MP for Ang Mo Kio GRC, felt that while many may not have extra cash for voluntary top-ups, the tax relief can incentivise more people to do so. For those without enough retirement savings, 'every source counts'.
While the move will boost retirement savings, Nominated MP Mary Liew urged the Government to look into getting higher investment returns for CPF savings.
'With high inflation rate and the high cost of living in Singapore, CPF savings have to keep up,' she said.
Savings in the CPF Ordinary Account earn an annual interest of 2.5 per cent. Interest is higher at 4 per cent for the Special, Medisave and Retirement accounts.
For two other MPs, the top-up serves a broader social goal. 'It sends the clear signal that in-laws are part of a broader family support network,' said Bishan- Toa Payoh GRC MP Mr Zainudin Nordin.
Ang Mo Kio GRC MP Seng Han Thong agreed, saying: 'It helps to promote good family values as it encourages younger Singaporeans to take care of the elderly in their families.'
The CPF Act and Income Tax Act will be amended to implement the changes.