If you are in Singapore and turn 55, then in 2025, you will see a major change in your CPF (Central Provident Fund) account because the CPF Special Account, which is one of the four CPF accounts, will not be accessible any longer. In its place, you will have a single Retirement Account to manage. Another important change announced during the Budget 2024 is the increase in the Enhanced Retirement Sum (ERS). Currently, the ERS is set at three times the Basic Retirement Sum (BRS). However, from 2025 onwards, it will be raised to four times the BRS.
This means that the amount of money you need to save for retirement, known as the ERS, will increase from $319,500 to $426,000. Presently, it’s set at three times the Basic Retirement Sum (BRS), but it will increase to four times the BRS. Because of this change, retirees will receive higher CPF LIFE payouts, going up from $2,530 to $3,330.
Year |
New ERS |
CPF LIFE payout(on new ERS) |
Old ERS |
CPF LIFE payout(on old ERS) |
2025 |
$426,000 |
$3,330 |
$319,500 |
$2,530 |
2026 |
$440,800 |
$3,440 |
$330,600 |
$2,610 |
2027 |
$456,400 |
$3,550 |
$342,300 |
$2,690 |
While this change aims to encourage Singaporeans to save more for retirement through CPF LIFE, there’s one downside to consider: the numbers might not add up perfectly. The most we’re allowed to put into our Retirement Account (the ERS) will go up by about 33.3%, but the payout we’ll receive will only increase by around 31.6%.
The ERS Will Go Up Every Year
From the table above, we can see that the Enhanced Retirement Sum (ERS) won’t stay the same. Every year, it will increase along with the Basic Retirement Sum (BRS), which goes up because of things like inflation, people living longer, and improvements in our living standards.
We already know that the Enhanced Retirement Sum (and the BRS and FRS) will keep going up until 2027. Based on what we see, it used to go up by about 3.0% every year, and more recently, it’s been going up by about 3.5% each year.
Year |
BRS |
FRS |
ERS |
2019 |
$88,000 |
$176,000 |
$264,000 |
2020 |
$90,500 |
$181,000 |
$271,500 |
2021 |
$93,000 |
$186,000 |
$279,000 |
2022 |
$96,000 |
$192,000 |
$288,000 |
2023 |
$99,400 |
$198,800 |
$298,200 |
2024 |
$102,900 |
$205,800 |
$308,700 |
2025 |
$106,500 |
$213,000 |
$426,000* |
2026 |
$110,200 |
$220,400 |
$440,800* |
2027 |
$114,100 |
$228,200 |
$456,400* |
From 2019 to 2022, the ERS went up by 3.0% every year. After that, it started increasing by about 3.5% each year, not counting the one-time jump from 3 times BRS to 4 times BRS.
It wouldn’t be shocking if the ERS (as well as BRS and FRS) keeps going up by roughly 3% to 3.5% every year.
What will be the amount of ERS when you reach 55 years old?
For someone starting work now, it’s tough to think about having almost half a million dollars for retirement. And it’s even harder to imagine it’ll keep going up every year.
To reach our Enhanced Retirement Sum (ERS) when we turn 55, we just need to increase the current ERS by 3% to 3.5% each year.
For instance, if someone starts working at 25 today, they’ll aim for a retirement sum of over $1.1 million.
Age |
Year |
ERS |
FRS |
BRS |
25 |
2024 |
$308,700 |
$205,800 |
$102,900 |
26 |
2025 |
$426,000 |
$213,000 |
$106,500 |
27 |
2026 |
$440,800 |
$220,400 |
$110,200 |
28 |
2027 |
$456,400 |
$228,200 |
$114,100 |
Based on 3.5% increments retirement sums |
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29 |
2028 |
$472,374 |
$236,187 |
$118,094 |
30 |
2029 |
$488,907 |
$244,454 |
$122,227 |
35 |
2034 |
$580,668 |
$290,334 |
$145,167 |
40 |
2039 |
$689,652 |
$344,826 |
$172,413 |
45 |
2044 |
$819,090 |
$409,545 |
$204,772 |
50 |
2049 |
$972,822 |
$486,411 |
$243,205 |
55 |
2054 |
$1,155,407 |
$577,704 |
$288,852 |
In the future, reaching the ERS might mean we all need to have a million dollars in our CPF! However, the Basic Retirement Sum (BRS), which lets us have a basic retirement in Singapore, is much more attainable at $289,000.
Can regular workers ever reach the enhanced retirement sum by age 55?
The median salary today is $4,550 and it’s been increasing by almost 3.5% each year for the past ten years. Let’s see if someone earning this much can reach the ERS.
It’s not easy, but if they actively save for retirement, there’s a chance. Looking at the table below, even someone earning the median income can surpass the Basic Retirement Sum (BRS) by age 55 with consistent savings and investments.
By managing their Special Account (SA) and Ordinary Account (OA) contributions or SA and annual Retirement Sum Top-up (RSTU) contributions, they can even surpass the Full Retirement Sum (FRS) by 55.
Combining contributions from both SA and OA can help them exceed the ERS. However, it might be difficult because many Singaporeans have a significant amount tied up in their homes. Downsizing our homes as we get older can be a smart move to ensure we have enough for retirement.
Age |
SA Contributions |
OA Contributions |
Annual RSTU of $8,000 |
25 |
$3,276 |
$12,558 |
$8,000 |
30 |
$26,177 |
$87,356 |
$53,064 |
35 |
$59,198 |
$184,171 |
$107,891 |
40 |
$107,600 |
$302,582 |
$174,596 |
45 |
$173,642 |
$452,063 |
$255,754 |
50 |
$271,142 |
$626,542 |
$354,494 |
55 |
$415,515 |
$817,016 |
$474,627 |
Total |
SA Contributions only: $383,435 (enough to hit beyond BRS)SA + Annual RSTU contribution of $8,000: $858,062 (enough to hit beyond FRS)SA + OA Contributions: $1.2 million (enough to hit beyond ERS) |
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What happens if we keep working until retirement age or re-employment age?
Around 2030, the Retirement Age will go up to 65 and the Re-employment Age will go up to 70. This means that it’s expected that more people will keep working until they reach these ages.
Age |
SA Contributions |
OA Contributions |
Annual RSTU of $8,000 |
55 |
$415,515 |
$817,016 |
$474,627 |
60 |
$573,825 |
$1,016,025 |
$620,787 |
65 |
$768,555 |
$1,181,242 |
$798,612 |
70 |
$984,086 |
$1,349,058 |
$1,014,965 |
If we keep working until our Retirement and Re-employment Ages, our Special Account (SA) contributions alone could potentially cover our Full Retirement Sum (FRS).
It’s also possible that by combining our SA and Ordinary Account (OA) balances, which could reach $1.95 million, we might be able to afford a home and reach the Enhanced Retirement Sum (ERS) of $1.16 million.
However, these are just estimates based on things like average salary and salary growth. Not everyone may achieve these targets individually. Additionally, the calculations take into account wage growth in our later years, which could be challenging to attain. On the other hand, some of us might earn more than the average salary during our peak working years.
Before you go, do check out our other article as well!
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