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Matched Retirement Savings Scheme - An awesome scheme to boost my parents' CPFs

​​The Matched Retirement Savings Scheme will be implemented in 2021 to help senior Singaporeans who have yet to meet the Basic Retirement Sum, save more for retirement.



Earlier in February this year during the Singapore Budget 2020, it was announced that there would be a new scheme known as the Matched Retirement Savings Scheme (MRSS) introduced in 2021 to help eligible senior Singaporeans with little to no Central Provident Fund (CPF) savings.


Source: Gov.sg



And if there's anything cheem* to me in my journey towards financial independence, it would probably be the many schemes and policies surrounding our CPF.


But well, as my mother always say: "Cheem doesn't mean can don't learn right?".


Fine.


So here it is.



What exactly is the Matched Retirement Savings Scheme (MRSS)?


From the CPF website:

​​The Matched Retirement Savings Scheme will be implemented in 2021 to help senior Singaporeans who have yet to meet the Basic Retirement Sum save more for retirement. Under the scheme, the Government will match every dollar of cash top-ups made to eligible members under the CPF Retirement Sum Topping-Up scheme up to an annual cap of S$600.

And if you are anything like me:


"Match every dollar of cash top-ups made" = Free money dropping from the sky


Oh yeah.



Who is eligible for the Matched Retirement Savings Scheme (MRSS)?


To be clear though:

  • The "senior Singaporean" must be aged between 55 to 70 (both inclusive);

  • The prevailing Basic Retirement Sum for 2021 is S$93,000;

  • The scheme will start from 2021, and will run for five consecutive years until 2025;

  • Average monthly income cannot exceed S$4,000;

  • Annual Value of property cannot be more than S$13,000 (So all HDBs are covered);

  • Cannot own more than one property.


For easy reference, CPF has also summarised the above criteria on their website in a nice table:


Source: CPF website



According to CPF, about 435,000 Singaporeans will be eligible for the MRSS based on this set of criteria, with the Government matching every dollar of cash top-ups made to these eligible members under the CPF Retirement Sum Topping-Up scheme, up to an annual cap of S$600.


So while I am not eligible for the MRSS myself, I realised both of my parents are eligible for it. This is great as their CPF savings are pretty low, and thus this would go a long way in helping them to boost their retirement nest.


Now assuming an annual cash top-ups of S$600 to both of my parents, a quick calculation reveals:

  • S$600 (MRSS matching) x 5 years x 2 persons = S$6,000 of "free money" from the Government

In addition, those who make the cash top-ups can also enjoy up to S$14,000 of tax relief, under the CPF Retirement Sum Topping-Up scheme.



So who can make the top-ups?


The cash top-ups can be made by anyone, including yourself, your loved ones and your friends. There are no restrictions.


In fact, the person making the cash top-up does not even have to be affiliated or related to the recipient. Which means to say that if any bosses out there wanna be nice and top up for their eligible staff/employee also can. #justsaying



But when would eligible Singaporeans get the dollar matching?


The matching grant for a given year will be automatically credited into the eligible member’s CPF Retirement Account by the first quarter of the following year.


e.g. If you are eligible for the MRSS and made cash top-ups in 2021, the matching grant will be credited into your CPF Retirement Account by the first quarter of 2022.



I think I am eligible for MRSS, what do I have to do exactly?


Nothing at all.


Yup you read that right, you need not do anything. :)


CPF Board will automatically assess your eligibility for MRSS every year based on data they have on record.


And if you qualify for MRSS, you will receive a notification from CPF Board informing you of your eligibility by the end of the first quarter each year from 2021 to 2025. You do not have to separately apply for MRSS on your own.


e.g. If you are eligible for the MRSS in 2021, CPF Board will notify you by the first quarter of 2021.



Closing Thoughts


For those (or in my case, my parents) who qualify for the MRSS and have little to no CPF savings, MRSS is no doubt a great opportunity to help bump up some retirement savings. I mean, who says no to "free money"?


Furthermore, if you are in a similar situation like my parents who have still not hit their first $30,000 in their CPFs (thus being eligible for 6% CPF interest), then $3,000 (cash top-ups) + $3000 (matching grant), compounded at 6% annually over 10 years would give you S$10,745, which translates to approximately $21,500 in total for both parents. Isn't compound interest simply amazing?


That said, do remember that any CPF top-ups are irreversible, and that there is no room for regret once you have topped up your CPF. So while the intention of this scheme might be good in nature, please still consider your personal circumstances carefully first before any CPF top-ups.


Peace.



If you can't qualify for the MRSS and is a young adult thinking of the potential growth trajectory of your CPF, you might be interested in my previous article: A million dollars in CPF by 55 - Is it possible for the average Joe?


*Cheem = Singlish term for deep, profound or complex

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Disclaimer: All information contained herein this blog is solely the writer's personal opinion, and does not constitute an offer, recommendation or solicitation of an offer of any kind. Readers are also advised to do their own due diligence, and to consult a financial adviser for any financial advice.

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All information contained herein this blog is solely Jeffrey's personal opinion, and does not constitute an offer, recommendation or solicitation of an offer to enter into a transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. It also does not constitute an offer to buy or sell an insurance or financial product or service nor is it intended to provide insurance or financial advice. Readers are fully responsible for their investment decision, including whether the product or service described (if any) herein is suitable for them. Readers are also advised to do their own due diligence, and to consult a financial adviser for any financial advice. Jeffrey will not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information herein, and makes no representation or warranty of any kind, express, implied or statutory regarding any information contained or referred to herein.