Recall that I stated one of my top 10 highlights in 2022 was helping my parents obtained Singapore Citizenship? Over the past year, they have begun to appreciate the numerous benefits of being a citizen on this little island. For instance, they received payouts from the GST Assurance Package, have been enjoying subsidized medical and transportation fees etc. Now they can add another feather to the cap with the Matched Retirement Savings Scheme (‘MRSS’). To be more specific, I helped my parents received $1,200 from the government as a result of CPF’s Matched Retirement Savings Scheme.
What is the Matched Retirement Savings Scheme?
The Matched Retirement Savings Scheme (‘MRSS’) was first introduced in 2021 and is expected to last for 5 years before government will review its effectiveness. The main objective is to help senior Singaporeans who have yet to meet Basic Retirement Sum (‘BRS’) to save more for retirement. This group will receive $1 of matching grant for every $1 of cash top-up, up to an annual cap of $600. Since this is intended to run for 5 years, the maximum grant or “free money” from the government is therefore capped at $3,000 from the MRSS.
Such a policy matched savings plan is similar to the CDA mechanism under the Baby Bonus Scheme. The matching grant will only appear in the following year, usually around the month of February. For instance, any matching grant from CPF for cash top up done to the Senior’s Retirement Account (‘RA) in Year 2022 will only appear in Year 2023. Note that anyone, including the Senior himself/herself, loved ones and employer, can make this cash top up. Moreover, it need not be done in 1 lump sum and can be performed over many months during the course of the year.
What is the Eligibility Criteria For MRSS?
Diagram 1 sets out the eligibility criteria for MRSS. MRSS is meant to provide targeted help to senior Singaporeans who are still seeking to meet the Basic Retirement Sum. The age group is set at 55-70 as younger members below age 55 have a longer horizon to earn more and save more for their retirement, while senior members beyond age 70 should have already started enjoying their CPF monthly payouts. Both my parents fall within this age group of 55-70.
Secondly, their Retirement Account (‘RA’) savings must be less than the prevailing Basic Retirement Sum (‘BRS’). For those who are not aware, the BRS, Full Retirement Sum and Enhanced Retirement Sum are already set out till year 2027 as shown in Diagram 2.
Other requirements include having a monthly income of less than $4,000, annual value of residence not more than $13,000 and not owning more than 1 property.
Fun fact: Did you know that even if you have just $1 less than the prevailing BRS, you will still be able to receive the full matching grant of $600!
I would imagine that potential beneficiaries from the MRSS would include including self-employed persons and caregivers. For self-employed, contributions to Ordinary Account (‘OA’) and Special Account (‘SA’) are not mandatory. Yet, these are the accounts that would flow into RA at age of 55. On the other hand, full-time caregivers would not have any CPF contributions to speak of as they are not employed.
My parents have been hawkers for a large part of their lives and therefore have minimal savings in their RA. Since eligibility for MRSS is automatically assessed annually, I know that they should qualify for the MRSS after receiving their citizenship in 2022. Note that there is no need to apply for MRSS as eligible members will be notified by CPF Board by first quarter every year. An example of a notification email is shown in Diagram 3.
For those who are not sure, do log on to the CPF Dashboard to check your eligibility as shown in Diagram 4.
Being a financial blogger that is more attuned to government financial schemes, I took proactive action to log into my parents’ CPF accounts online to check rather than wait for the notification from CPF. What I found on their CPF dashboards confirmed that they are eligible for MRSS as shown in Diagram 5.
With this in mind, I proceeded to top up $600 into each of their RA. As a result, they should both receive the matching grant of $600 in 2024. I told them to treat it as both the government and their son giving them hongbaos during CNY!
Tax Relief for cash top up to RA
If you are already wondering by now, it is indeed true that a cash top-up to the RA is part of the Retirement Sum Topping Up (‘RSTU) scheme. Since I was the person making the cash top-up to my parents’ RA, I will be entitled to tax relief that will reduce my tax bill in 2024. Tax relief for cash top-up to loved one’s CPF account is capped at $8,000 per year. This is the other understated benefit for participating in the MRSS, and yet another example of killing 2 birds with 1 stone.
My parents still have some way to go before their RA reach the BRS, but with a little help from the children and government via MRSS, they should eventually get there.
This article is published on 5 Feb 2023
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