Skip to main content

Release of Occasional Paper on "Adequacy of CPF Payouts"

How well does CPF provide for retirement?

Young Singaporeans joining the workforce will accumulate savings through the CPF system that will provide adequately for their retirement, and compare well with international standards, according to the Occasional Paper on “Adequacy of Singapore’s CPF Payouts: Income Replacement Rates of Entrant Workers” released on 14 November 2012.

The study used a widely-used international measure for retirement adequacy called the Income Replacement Rate (IRR), which is the ratio of retirement income to pre-retirement earnings. The study estimated the IRR that a member could attain at age 65 based on his accumulated CPF savings, including savings above the Minimum Sum which the member has the option to withdraw

Amongst new entrants to the workforce today, the study finds that the median male earner will be able to replace 70% of his wages when he retires. For the median female earner, the IRR is at 64%. These are within the range recommended by the World Bank and comparable to those seen in OECD countries. This is without considering the additional savings that a Singaporean would typically obtain if he were to sell his HDB home and move to a smaller flat during his retirement.

This study, by two independent National University of Singapore (NUS) researchers – Associate Professors Chia Ngee Choon and Albert Tsui – was commissioned by the Ministry of Manpower. Their work fills gaps in previous similar studies, by incorporating unique institutional features of the CPF.

Please refer to the findings and its accompanying infographic.