The CPF scheme was established in 1955 as a compulsory savings plan for Singaporeans to build a fund that they could use in their retirement years. In 1987, a “minimum sum” for retirement was introduced. This amount would be held in your CPF account when you turn 55 and distributed monthly in your retirement, until it runs out.
The next evolutionary step arrived with the introduction of the Basic Retirement Sum (BRS) by the CPF Advisory Panel in 2015, along with the Full Retirement Sum (FRS) and the Enhanced Retirement Sum (ERS). The Panel recognised that the retirement needs of households and individuals vary widely, and therefore setting a single “minimum sum” for retirement would be inadequate.
It has been almost 10 years since the BRS was implemented in 2017, so it’s a good opportunity to explore it in further detail and understand how helps you with your retirement goals.
Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55
#1 The BRS Is A Retirement Benchmark
When the concept of the Basic Retirement Sum was introduced in 2015, the goal was to determine the appropriate level of payout for a retiree from a lower-middle income household, who owned the property they lived in and not required to pay rent. The exact amount would take its reference from the latest Household Expenditure Survey (HES), which is conducted every 5 years. This is how the BRS became a retirement benchmark we use today.
The Full Retirement Sum (FRS) would be set at two times the BRS, and the ERS was set at 1.5x the FRS up until 2025, when it rose to become 2x the FRS.
While the Basic Retirement Sum rises each year, an individual’s BRS will be fixed in the year they turn 55.
| If you turn 55 in | Basic Retirement Sum | Full Retirement Sum | Enhanced Retirement Sum |
| 2024 | $102,900 | $205,800 | $308,700 |
| 2025 | $106,500 | $213,000 | $426,000 |
| 2026 | $110,200 | $220,400 | $440,800 |
| 2027 | $114,100 | $228,200 | $456,400 |
After turning 55, you will be able to withdraw part of your Retirement Account savings from CPF. The maximum amount you are eligible to withdraw depends on whether you own a property with a remaining lease that can last you till you turn 95. Even if you are unable to meet the BRS, you can withdraw at least $5,000 from your CPF Ordinary Account and Special Account.
To benefit from the lower Basic Retirement Sum, and withdraw more savings from your Retirement Account, you will need to pledge your property. If you don’t own a property, or don’t wish to pledge it, then you will only be allowed to withdraw savings above the FRS amount.
Read Also: Here’s What You Need To Know About Pledging Your Property To Meet The CPF Full Retirement Sum (FRS)
#2 The Basic Retirement Sum And CPF LIFE Ensures Regular Payouts For The Rest Of Your Life
CPF LIFE was introduced in 2009 once it became clear that a growing number of Singaporeans would outlive their CPF savings, due to longer lifespans. CPF LIFE became a national annuity scheme that ensures regular payouts for the rest of your life, no matter how long you live.
Let’s compare the monthly payouts from the Basic Retirement Sum and the Full Retirement Sum to illustrate. The amounts are based on those who turn 55 in 2025.
| Amount at 55 | Monthly Payout From Age 65 | |
| Basic Retirement Sum | $106,500 | $860 – $930 |
| Full Retirement Sum | $213,000 | $1,610 – $1,730 |
| Enhanced Retirement Sum | $426,000 | $3,100 – $3,300 |
If you turn 55 this year, and have at least the Basic Retirement Sum of $106,500, you can expect to receive a monthly payout of at least $860 to $930 for the rest of your life once you turn 65, thanks to CPF LIFE.
While the BRS is half of the FRS, the monthly payouts your receive is more than half of the monthly payouts that those on FRS receives. Similarly, while the BRS is a quarter of the ERS, monthly payouts are higher. This is mainly because of the extra interest rates that CPF pays on the first $60,000 of CPF savings, and additional extra interest rates on the first $30,000 of CPF savings for those above 55.
Read Also: BRS, FRS, ERS: Why There Are 3 CPF Retirement Sums & Why They Increase Every Year
#3 You Need To Refund Your CPF Up To FRS If You Sell Your Pledged Home
The BRS is meant to provide you with enough each month to cover your basic living needs. However, it will not be enough if you also need to pay rental expenses.
The purpose of the property pledge is to ensure that you will not have to worry about rental expenses in your retirement by ensuring that you own a property with a remaining lease that can last you till you’re 95.
Should you sell or transfer the property you’ve pledged, you will need to refund the following to your Retirement Account:
- the CPF principal amount that you had withdrawn for your property, as well as the accrued interest
- the amount withdrawn from your Retirement Account that you have pledged to refund
This is to restore your Retirement Account up to the FRS, so that your CPF LIFE payouts can increase accordingly – accounting for rent. For those who turn 55 in 2025, that increase is between $750 to $800.
Read Also: History Of CPF Interest Rates And How They Have Changed Since 1955
#4 You Don’t Need To Hit The BRS
A long-time misconception is that it is a requirement to hit the Basic Retirement Sum. This is also why it has been almost 10 years since we’ve moved away from the term “Minimum Sum”, as it created a misleading impression that some kind of top up was required if the amount wasn’t achieved.
On the contrary, the BRS is just a benchmark for your retirement needs. Even if your savings fall short of the amount, you are still able to receive a monthly payout.
When you turn 55, even if you have not hit the Basic Retirement Sum, you have the option of withdrawing at least $5,000, if you have that amount in your CPF OA and SA. The remaining CPF savings will then determine your monthly payout at 65.
As a simple illustration, if you have $65,000 in your Retirement Account when you turn 55, you can withdraw $5,000. The remaining $60,000 will go into your Retirement Account, and grow to $97,300 by the time you turn 65, and you will receive a monthly payout of $540 to $570.
Read Also: Complete Guide To CPF Retirement Account
#5 Pledging Your Property Has Been An Option Since 1987
You may be surprised to know that while the BRS was first named in 2015, the idea of pledging your property to cover 50% of the Full Retirement Sum has been around since 1995. In fact, when the Minimum Sum Scheme was first implemented in 1987, pledging your property allowed you to cover the full amount of $30,000.
Why was there a need to call it the Basic Retirement Sum? Then-Prime Minister Lee Hsien Loong said it best at the 2014 National Day Rally.
After describing the use of a property pledge to reduce the retirement sum by half, PM Lee acknowledged that “honestly, not all of us know and I would say even not all the MPs are completely familiar.”
By introducing the concept of the Basic Retirement Sum, it better illustrates the concept of needing to set aside a smaller retirement sum if there is a property pledge.
The post 5 Things To Understand About The CPF Basic Retirement Sum (BRS), And Why It’s Essential For Your Retirement appeared first on DollarsAndSense.sg.
