We’re all familiar with the Central Provident Fund (CPF) in Singapore. After all, a portion of our income goes into our CPF accounts every month.

But are you aware of the various schemes offered by CPF to promote the accumulation of sufficient savings for retirement? More specifically, the Matched Retirement Savings Scheme (MRSS) and Retirement Sum Topping Up Scheme (RSTU) are two significant programmes that help members to increase their retirement savings.

1. What is the Matched Retirement Savings Scheme (MRSS)

Introduced in 2021, the MRSS provides additional support for lower- to middle-income Singaporeans who have yet to meet the Basic Retirement Sum (BRS), which is $99,400 as of 2023, in their CPF accounts.

Under the MRSS, the government matches every dollar of cash top-ups made to the CPF Retirement Account of eligible members, up to an annual cap of $600. This means that if an eligible member tops up $600 in a year, they will receive an additional $600 from the government, effectively doubling their top-up!

Eligibility Criteria For Matched Retirement Savings Scheme (MRSS)

• Who qualifies: Singapore citizens aged 55 to 70 (both inclusive) as of 31st December of the assessment year

• ​Retirement Account (RA) Savings: Less than $99,400 (the BRS amount for the year, $99,400 in 2023)

• Average monthly income: Not more than $4,000.

• Annual value of residence: Not more than $13,000

• Property ownership: Does not own more than one property

Who Is The Matched Retirement Savings Scheme (MRSS) For

So, should you participate in the MRSS? Here are those who will benefit greatly from the MRSS.

Lower-income senior citizens who haven’t met the BRS: The goal of MRSS is to support senior Singapore citizens who have lower retirement savings, allowing them to build a more comfortable nest egg for their retirement years.

Seniors who haven’t reached the BRS ($99,400 as of 2023) and with an average monthly income not exceeding $4,000 ought to participate in the MRSS to boost their savings for retirement.

Those who are still working also qualify for tax relief of up to $16,000 per calendar year if they do a self-top-up.

Loved ones, family members, and employers of lower-income senior citizens: Other than senior citizens themselves, loved ones and family members of these senior citizens can also contribute to the retirement savings of eligible individuals by making cash top-ups. These include:

• Your parents

• Your spouse

• Your sibling

• Your parents-in-law

• Your grandparents-in-law

Similarly, this qualifies them for tax relief of up to $16,000 per calendar year.

Employers who would like to make cash top-ups for their eligible employees will also qualify for tax deductions as an employer.

How To Top-Up Under The Matched Retirement Savings Scheme (MRSS)

1. Head to the CPF e-cashier tab

2. Fill in the recipient’s NRIC and the top-up amount. Top up $600 to enjoy the full dollar-for-dollar matching amount given by the government under the scheme. The payments can be split into smaller sums as long as you top up by the end of the year.

3. Confirm the top-up amount

4. Choose your payment option with either PayNow or E-nets

5. Check and ensure you receive an email notifying you about the transaction and the amount you have topped up.

Now, on to the next scheme you ought to know about:

2. What is the Retirement Sum Topping Up Scheme (RSTU)

Meanwhile, the Retirement Sum Topping-Up scheme (RSTU) is another crucial CPF scheme in Singapore which allows members to top up their own or their loved ones’ Special Account (SA) for members below 55 years old or Retirement Account (RA) for members above 55 years old to enhance retirement savings.

Eligibility Criteria For Retirement Sum Topping Up Scheme (RSTU)

• For members below 55 years old: Existing SA has not reached the Full Retirement Sum (FRS), which is $198,800 in 2023

• For members above 55 years old: Existing RA have not reached ERS, which is $397,600 in 2023

Who Is The Retirement Sum Topping Up (RSTU) Scheme For

The RSTU scheme caters to a variety of individuals, including:

Cash-rich individuals looking for a safe place to park their idle funds: RSTU offers a low-risk option for those who have extra cash on hand and want competitive interest rates that are typically higher than regular savings accounts. However, remember that depositing money into your SA/RA is a non-reversible process.

Those who wish to reduce their taxable income: Run out of ways to reduce your chargeable income? Try RSTU to enjoy a generous tax relief of up to $8,000 if you add money to your own SA/RA (depending on your age) or MediSave Account (MA). Score an extra tax relief of up to $8,000 if you add money to your loved one’s SA/RA (depending on their age) or MA.

However, take note of these rules:

• The $8,000 tax relief cap is shared between the money you add to your SA/RA and MA.

• The total amount of tax relief you can get in a year from all sources is capped at $80,000.

• Tax relief applies to money you add to your own account and your loved one’s accounts up to the FRS.

• If you do cash top-ups to your spouse or sibling’s account, you can only get tax relief if they earned less or equal to $4,000 last year or if they are handicapped.

Self-employed individuals or those without regular CPF contributions: Individuals who are self-employed, or those who don’t contribute regularly to their CPF accounts due to the nature of their work, can use the RSTU scheme to increase their retirement savings.

Seniors preparing for retirement: For seniors actively preparing for their golden years, RSTU offers a faster chance for them to reach their FRS or Enhanced Retirement Sum (ERS). They can then ultimately enjoy higher monthly lifelong CPF LIFE payouts upon reaching the eligible payout age.

People who want to help their loved ones secure their retirement: If you have family members who may not have saved enough for their retirement, you can help by topping up their CPF accounts. This not only provides financial assistance to your loved ones but also grants you up to $8,000 in tax benefits.

Limitations Of The Retirement Sum Topping Up (RSTU) Scheme

Despite the RSTU scheme’s various benefits, take note that funds contributed through RSTU top-ups cannot be withdrawn for any other purposes, such as education, insurance premium payments, housing, or investment. This means they cannot be “shielded” if you’re planning to execute this hack when you’re approaching 55 years old.

The monies are specifically reserved for retirement needs and can only be utilised for monthly payouts under the Retirement Sum Scheme or CPF LIFE.

Rounding it up

Both the MRSS and RSTU are important CPF schemes in Singapore as they support the objective of retirement adequacy. While the MRSS provides a helping hand to those who are behind in their savings, the RSTU scheme allows all members to actively contribute more towards their retirement.

Go for the MRSS scheme if you or your loved one have yet to reach the BRS. It’s technically free money from the government!

As for the RSTU scheme, it is more complex. Make use of the scheme only if you are alright sacrificing liquidity as the funds can only be used during retirement age. If you prefer greater flexibility and are open to taking on more risks to enjoy better returns, opt for a globally diversified portfolio like the S&P 500.

Alternatively, you may consider making a MediSave top-up to enjoy similar advantages of increased interest rates and tax relief, all while gaining the flexibility to utilise your MediSave funds for medical purposes, benefiting both yourself and your loved ones.