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Retirement in Singapore: FRS versus ERS
Let me state up front that I am totally for the Central Provident Fund (CPF) Scheme. Despite the many complaints, I think CPF is perfect for the majority of Singaporeans, as successful investment is a skill that only a minority possess.
As I approach my “CPF Age” of 55, I have a decision to make. Keep the Enhanced Retirement Sum (ERS) with the CPF Board for it to accrue for higher monthly payouts at age 65, or withdraw the excess above the Full Retirement Sum (FRS) and invest it myself.
Let’s do the sums ….
For those turning 55 in 2024, our retirement sums are as shown in Diagram 1 below. Based on the Basic Retirement Sum (BRS) of $102,900, the Full Retirement Sum (FRS) is $205,800 while the Enhanced Retirement Sum (ERS) is $308,700. With these sums, the projected monthly payouts at age 65 are $840 for the BRS, $1,560 for the FRS, and $2,339 for the ERS. The difference in monthly payouts between the ERS and FRS is $779.
Assuming I withdraw the difference — $102,900 — and invest it. And further assuming I can get an annual return of 6%, compounded annually, my initial capital of $102,900 would have grown to $195,334. At continued 6% returns per annum, this $195,334 would give me an annual payout of $11,720 or a monthly…
