national education

Maybe sometimes you hear daddy and mummy talking about something called CPF . Or perhaps, you have heard it on the news or in PM Lee's National Day Rally Speech. What is CPF and why are all the adults talking about it?

CPF actually stands for the Central Provident Fund. Sounds complicated?

Not to worry. Let us tell you what CPF is all about.

What is CPF?

CPF is a savings plan that is implemented by the government for all employed Singaporeans and Singapore Permanent Residents (PRs).

This simply means that all employed Singaporeans and Singapore PRs must set aside a portion of their income to be saved in the CPF.

Besides that, employers are also required by law to contribute to their employee's CPF accounts. The amount that an employer has to contribute for a worker varies, depending on the worker's age and income.

All employed Singaporeans who earn more than $500 per month must contribute 20% of their income to CPF.

 

Work it out: If you were required to set aside 20% of your daily allowance to contribute to CPF, how much would it be?

 

If you received a daily allowance of $1, that would mean setting aside 20 cents. Not that much, right? Maybe you could consider saving some of your allowance everyday!

 

Why do we need CPF?

The government has allowed the money in CPF to be used in a number of ways, but the main purpose for having CPF savings is to ensure that people have money for retirement.

Have you wondered what will happen when your parents stop working? How are they going to have money for food, clothing and other basic necessities in life?

The CPF is one way to ensure that your parents have money to survive in their old age.

More and more Singaporeans are living longer. The CPF aims to ensure that Singaporeans have money in their old age when they stop working.

 

Many uses of CPF

 Besides retirement, the money in CPF can be used for other purposes such as buying a home, education and healthcare.

- Buying a home

 Money in the CPF account may be used to buy a Housing Development Board (HDB) flat from the government or a private house or a condominium from housing developers.

It is highly likely that the house you are living in now was at least partially paid with the money in your parents' CPF accounts.

- Education

 Funds in the CPF account may also be used for education purposes. However, this is only allowed for university or polytechnic studies.

When you are older and ready to enter a university or a polytechnic, your parents can use their CPF savings to pay for your course of study.

- Healthcare

 Contributions to the Medisave Account, which is part of CPF, can be used for healthcare, including paying for hospital bills and certain treatments such as chemotherapy and radiotherapy.

Do you understand what CPF is all about now? Don't you think that CPF is a useful savings plan that every Singaporean should have?