CENTRAL Provident Fund (CPF) members turning 55 between July 1 this year and June 30 next year will have to leave at least $139,000 in their accounts for monthly payouts in their later years.
This is $8,000 more than last year's Minimum Sum of $131,000.
The Minimum Sum Scheme was introduced to help ensure that CPF members, who can withdraw their CPF savings at 55, will have enough to meet their basic retirement after they turn 65.
So CPF members have to leave some money in their accounts beyond the age of 55. In 2003, the Goverment set this Minimum Sum at $120,000 and aimed to reach it in 10 years.
Given adjustments for inflation, the sum to be set aside has in fact risen every year since 2004.
As a result of high inflation this past year, the increase for the year ahead would have been $12,000 - considerably more than increases in past years.
Instead of doing that, the Government has decided to raise the Minimum Sum by $8,000 and spread the remaining increases over a longer period than originally planned. CPF members will now reach the Minimum Sum target by 2015.
Those who have withdrawn CPF savings to buy property and cannot meet the Minimum Sum have to pledge part of the property's value towards the scheme.
In addition, a CPF member must set aside an amount in his Medisave account for medical expenses.
This Medisave Minimum Sum will also be raised to $38,500, from $36,000, with effect from July 1.
The changes were outlined in a joint statement from the CPF Board and the Ministry of Manpower yesterday.
Yesterday, Minister of State for Manpower Tan Chuan-Jin reiterated the rationale for increasing the Minimum Sum even though only about half of members at age 55 are able to meet it.
That proportion, however, is increasing. Last year, 45 per cent of CPF members who turned 55 met the Minimum Sum, compared to 36 per cent in 2007.
He said that those who can meet the Minimum Sum can be assured of monthly payouts to cover their basic needs in retirement.
'If we do not increase the (Minimum Sum) in line with inflation, we may not ensure Singaporeans are financially provided for in their retirement years,' he said.