Why Perform A CPF Top-Up To Spouse’s Retirement Account

Confucian teachings have perpetuated the belief that the role of a woman lies in reproduction and managing the household. Therefore, for folks who are aged over 55 today, they probably grow up in a society where it is common to have only one sole breadwinner in the family. An inconsequential result of this social norm in modern Singapore is that woman retirees today have had lesser years to build up their retirement savings. Many of them have low CPF balances and Heartland Boy’s mother-in-law was unfortunately one of them. However, his father-in-law performed a CPF top-up to his spouse’s retirement account several years ago after learning about the various pros and cons.

Pros Of Topping Up Your Spouse’s Account Using CPF

 

1. Potentially Higher Interest Rate For Household CPF Accounts

A little-known fact is that CPF members who are aged over 55 years old receive an additional 1% extra interest on the first $30,000 of their CPF savings. This is on top of the 1% additional interest on the first $60,000 in CPF combined balances (with up to $20,000 from the Ordinary Account) which every CPF member regardless of age enjoys. In summary, Table 1 shows the various interest rate tiers for CPF members aged over 55:

Therefore, when a CPF member with high CPF balances transfers funds from his CPF to the spouse’s retirement account (assume CPF member is aged over 55), the household can potentially benefit from an overall higher interest income. Here is an illustration of a BEFORE and AFTER scenario for a household that performs a top up to a spouse’s CPF account.

 

As Table 3 has illustrated, the household benefits from an additional $500 in annual interest income when the husband performs a top up to his wife’s CPF account using his own CPF funds. Additional income has flowed into the household, all without them having to deposit a single cent extra.

It is this additional extra interest rate that inspires Heartland Boy to perform a cash top up to his parents instead of passing them a cash allowance.

As a bonus tip, if you already intend to do an annual top up, you may want to do it in January instead of December to earn higher interest as CPF interest is calculated on a monthly basis.

2. Threshold For Spouse CPF Top Up Has Been Lowered

For technicality’s sake, the act of topping up a loved one’s CPF account, whether by cash or via a CPF transfer, is known as the Retirement Sum Topping-Up Scheme. To ensure that the benefits of the additional extra interest rate can reach a larger audience, the government has lowered the threshold on its eligibility.

Before 1 Jan 2016, only CPF savings above the Full Retirement Sum (‘FRS’) can be transferred to the spouse. However, it is now possible for CPF members to transfer their CPF funds to top up their spouse’s CPF accounts after setting aside the BRS (Basic Retirement Sum) in their own CPF accounts.

Now that the threshold has been lowered, there can truly be no excuses for husbands to shower some generosity towards their wives. Furthermore, for members who are aged over 55, it is possible to receive such CPF transfers or cash top-ups to their Retirement Accounts up to the current Enhanced Retirement Sum (‘ERS’). That’s the maximum amount that can be topped-up and represents the next level of test on the strength of the spousal love between the soon-to-be retirees.

3. Emotional Security For The Wife

The homemaker spouse has probably worked just as hard, if not harder, to provide for the family. In ensuring that the household needs are taken care of, the husband can go out and work with a greater peace of mind. Unfortunately, there is little or no monetary reward for the housewife’s contributions.

With the children all grown-up, it is still not too late to give a serious thought on building up a sizeable retirement nest. This is where the husband can show his token of appreciation by performing a CPF top up to the spouse’s retirement account. In this way, she will have her own source of payouts from CPF LIFE. To still be financially dependent on her spouse in her retirement years could very well eat into her emotional security.

Cons Of Topping Up Your Spouse’s Account Using CPF

 

1. Miss Out On Bicentennial Bonus

In Budget 2019, Finance Minister Heng Swee Keat announced that Singaporeans aged 50 to 64 in Year 2019 with less than $60,000 of retirement savings in their CPF accounts will receive a top-up of up to $1,000 into their CPF accounts. If you are a loving husband who has dutifully topped-up funds to your spouse’s CPF account, your wife may miss out on this one-time handout from the government.

While this is slightly unfortunate, Heartland Boy hopes that those who missed out would realise that the household had already benefitted from several years of extra bonus interest generated as shown in Table 3. Even on hindsight, performing a CPF top up to a spouse retirement account still counts as a WIN for the family.

2. No Tax Relief For CPF Transfers

To be absolutely clear, there is no tax relief generated when one transfers CPF funds from an account to another. Tax relief is ONLY applicable when a cash top-up is made, subject to various conditions. (Think of it as bringing external money into your CPF ecosystem)

Father-In-Law Performed A CPF Top-Up To His Spouse

Having understood the merits of a top-up to a spouse’s CPF account, Heartland Boy’s father-in-law performed this act of love several years ago. The family’s situation is exactly as described; the husband has adequate CPF funds as a result of years of CPF contributions from his continued employment while the wife (a homemaker) has insufficient CPF funds. With a fully-paid up housing mortgage, his father-in-law did a one-time transfer from his CPF funds into his mother-in-law’s CPF RA.

Heartland Boy even earned some brownie points by helping the father-in-law to perform the CPF top-up. Here is his experience and hopefully, this can serve as a guide or reference for those who wish to perform a CPF top up to their loved ones.

How to Do A CPF Top Up To Your Spouse

Step 1: Login with your SingPass on the CPF website. Select ‘My Requests’ under my cpf Online Services to your left.

Step 2: Expand the selection bar for ‘Building Up My/My Recipient’s CPF Savings’

Step 3: Select ‘Transfer from my CPF Accounts to my recipient’s Retirement Account’ if your spouse is over age 55. If your spouse if below 55 years old, select ‘Special Account’ instead.

Step 4: After acknowledging the disclaimer, choose ‘Spouse’ from one of the drop-down options. Please also include your spouse’s NRIC/ CPF Account number and click ‘Next’.

Step 5: Acknowledge the disclaimer and tick the declaration check box. Key in the magical amount to be transferred and attach any supporting documents (eg: a marriage certificate) if this is your first transfer.

Step 6: Be thrilled when you analyze your next CPF statement as the combined CPF funds will now work harder for your household! Ask for a kiss as well 😀

For those who prefer to do the cash top up via CPF mobile app, here is an online demo for easy reference.