Singapore social security system is managed by the state-run Central Provident Fund (“CPF”). Defined contributions to the CPF are mandatory for most workers and are basaed on an employee's age, with lower rates for employees aged 51 or older. Contributions are allocated into four separate individual accounts: (i) an Ordinary Account, which can be used to finance the purchase of a home, approved investments, payment of CPF insurance and education; (ii) a Special Account, which is mainly for old-age needs; (iii) a Medisave Account, that pays for hospital treatment, medical benefits and approved medical insurance; and (iv) a Retirement Account, to finance retirement.
At age 55, CPF members must set aside a minimum sum of S$117,000 (approximately US$83,000) from the Ordinary Account and the Special Account to fund the Retirement Account. Any remainder may be withdrawn. It is also possible to withdraw from the Medisave Account funds greater than the Medisave minimum sum of S$34,500 (approximately US$25,500). Funds in the Retirement Account may be used to purchase a life annuity or to make programmed withdrawals from age 62 onwards (increasing gradually to age 65 by 2018).
On May 1, 2010 the government of Singapore announced a gradual increase in the employer contribution rate to the CPF by 1% in two steps: 0.5% took place on September 1, 2010 and 0.5% as of March 1, 2011.
Before such increase, employers contributed 14.5% of earnings for most employees and employees contributed 20% of earnings.
Sources: Social Security Programs Throughout the World: Asia and the Pacific, 2008; "Other CPF Schemes and Services," Central Provident Fund Board, 2010; "Changes to CPF Contribution Rates," Central Provident Fund Board, May 2010; Ministry of Manpower press release, May 1, 2010; "Employers' CPF Rate to Go Up by 1 Point," The Straits Times, May 2, 2010; "Companies Urged Not to Short-Change Workers as a Result of 1% Increase in CPF Rate," Channel NewsAsia¸ May 3, 2010; Ministry of Trade and Industry press release, May 20, 2010.