Fact 1: The Majulah Package has three components: a yearly CPF bonus, a one-time CPF Retirement Savings Bonus, and a one-time MediSave bonus. The first component of the package is the Earn and Save Bonus. Lower- and middle-income workers can get a CPF bonus of between $400 and $1,000 yearly as long as they remain in the workforce, whether full- or part-time. This bonus will be credited into their CPF account, on top of the usual employer and employee contributions. This means that you can grow your retirement savings faster by working longer.

The second component of the package is the Retirement Savings Bonus. This is a one-time CPF bonus of between $1,000 and $1,500 for those who have not reached their Basic Retirement Sum (BRS). The BRS is the amount of savings you need in your CPF account when you reach 65 years old to receive a monthly payout for life under the CPF LIFE scheme. The Retirement Savings Bonus will help you top up your CPF account so that you can receive higher monthly payouts when you retire.
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The third component of the package is the MediSave Bonus. This is a one-time top-up of between $500 and $1,000 to your MediSave account. MediSave is a national medical savings scheme that helps you pay for your healthcare expenses, such as hospitalisation bills, outpatient treatments, and insurance premiums. The MediSave Bonus will give you more peace of mind when it comes to your healthcare needs.
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Fact 2: The Majulah Package is means-tested, so not everyone will receive the same amount of benefits.

The Majulah Package aims to offer additional support to those who are most in need. Accordingly, eligibility for its range of benefits will be determined by various factors such as income level, the annual value of one's residence, ownership of property, and CPF savings. Comprehensive information on the qualification criteria will be released in 2024.

For instance, if you are someone with a lower income and fewer assets, you could gain up to an additional $12,000 in CPF savings, inclusive of interest, if you opt to work for another decade and retire at the age of 65. You can also qualify for a one-time Retirement Savings Bonus of up to $1,500 if you haven't met the Basic Retirement Sum (BRS). Additionally, a one-time MediSave Bonus of up to $1,000 will be available to you.
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Conversely, if you are on the higher end of the income spectrum and possess considerable wealth, you may not be eligible for any of the Majulah Package's benefits. This is because it is assumed that you already have adequate savings for retirement and sufficient healthcare coverage.
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Fact 3: The Majulah Package will benefit 1.4 million Singaporeans aged 50 and above in 2023.

The Majulah Package is designed to benefit individuals born in 1973 or earlier. This includes people in their early 50s to early 60s, as well as members of the Merdeka Generation born between 1950 and 1959, and the Pioneer Generation born before 1950. The package aims to assist more than 80% of Singaporeans within this age range.

Regarding its financial implications, the Majulah Package is projected to have a lifetime cost of $7 billion. This substantial allocation by the government aims to enhance retirement security and healthcare provisions for older Singaporeans.
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Fact 4: The Majulah Package complements existing schemes for older Singaporeans.

The Majulah Package is designed to work in harmony with existing support systems for older residents of Singapore, rather than replace or duplicate them.

For instance, if you're part of the Merdeka Generation or Pioneer Generation, your existing benefits like MediSave top-ups, outpatient care subsidies, and premium subsidies for MediShield Life will remain unchanged. The Majulah Package enhances these benefits by offering supplementary contributions to your CPF and MediSave accounts, over and above what you already get.

Likewise, if you're a younger senior qualified for other initiatives like the Workfare Income Supplement (WIS), Silver Support Scheme (SSS), or GST Voucher (GSTV), you will still receive these benefits. The Majulah Package steps in to augment your financial situation by giving you an extra layer of income and savings, in addition to what you already receive.
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Fact 5: The Majulah Package is part of the government’s long-term plan to prepare Singaporeans for an ageing population.

The Majulah Package is part of the government’s long-term plan to prepare Singaporeans for an ageing population. By 2030, one in four Singaporeans will be aged 65 and above. This means that there will be fewer working-age people to support the growing number of seniors.

To address this challenge, the government has been implementing various measures to help Singaporeans live longer, healthier, and happier lives. These include enhancing healthcare services and infrastructure, promoting active ageing and lifelong learning, and strengthening social support networks.

The Majulah Package is another step in this direction. It aims to encourage older Singaporeans to stay in the workforce longer, build up their retirement savings, and take care of their health. By doing so, they can enjoy a better quality of life in their golden years, and contribute to the nation’s progress.
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Fact 6: The Majulah Package reflects the government’s recognition and appreciation of older Singaporeans.

The Majulah Package reflects the government’s recognition and appreciation of older Singaporeans. PM Lee said that the package is a way of saying “thank you” to the seniors who have contributed to Singapore’s development over the years.

He also said that the package is a way of showing “solidarity” with the seniors who may face more difficulties in their later years. He urged younger Singaporeans to support their elders, and expressed his confidence that Singaporeans will overcome any challenges together as one people.

The Majulah Package is thus a manifestation of the spirit of “Majulah”, which means “onward” or “forward” in Malay. It signifies the government’s commitment to help older Singaporeans move forward with dignity and confidence, and the nation’s aspiration to advance together as a united and resilient society.
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Looking for ways to save more money for your retirement and pay less in taxes? Then the Supplementary Retirement Scheme (SRS) could be your answer. Dive into our comprehensive guide to understand how SRS works and how it could be a key component of your retirement planning.

SRS stands for Supplementary Retirement Scheme, a voluntary scheme that complements your CPF savings, allowing you to save more for your retirement. Here's a glimpse of what you can enjoy with SRS:

Tax Relief on SRS Contributions

• For Singapore Citizens/Permanent Residents: Claim up to $15,300 per year.
• For Foreigners: Claim up to $35,700 per year.
• Important Note: Personal income tax relief cap of $80,000 per year.
• Tax-Free Investment Returns
• Invest your SRS funds in approved products such as stocks, bonds, ETFs, robo-advisors, and more. The returns are not taxed until withdrawn.

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50% Tax Concession on Withdrawals
Upon reaching the statutory retirement age (currently 63), you can start withdrawing your SRS funds over a 10-year period, with only 50% of the withdrawals being taxable.

Struggling with saving discipline? With SRS, once you put your money in, you can't touch it until you reach the statutory retirement age. It helps in long-term saving and prevents panic selling during market fluctuations.

Contributing to SRS not only helps you save on taxes (up to $10,000) but also allows you to grow your wealth through various investment options. Even if you have a smaller amount, contributing regularly to SRS can make a significant difference.

​Contributing $10,000 to your SRS every year could save you anywhere from $200 to $1,500, depending on your income tax bracket. Over 30 years, the savings could add up to $34,500 or more, a substantial amount for future planning.

While SRS has numerous benefits, there are scenarios where it may not be the best option:

• If you might need to withdraw before retirement age.
• If other retirement savings options like CPF are more suitable.
• If you're struggling financially and have more pressing expenses.

Depending on your risk tolerance, SRS offers various investment options:

• Risk-Averse: Singapore Savings Bonds, fixed deposits.
• Risk-Tolerant: ETFs, blue-chip shares.
• Mix and Match: Create a personalized portfolio.

​Want to maximize your SRS benefits? Consider the "40K tax-free withdrawal" strategy. Contribute wisely and withdraw up to $40,000 each year tax-free for 10 years, a lucrative way to enjoy your retirement savings.

​To use this strategy, you need to contribute the maximum amount to your SRS account each year, which is currently $15,300 for Singaporeans and PRs, and $35,700 for foreigners. If you do this, you will have a total of $400,000 in your SRS account after 10 years.

Once you have reached the statutory retirement age, you can start withdrawing $40,000 each year from your SRS account tax-free. You can continue to do this for 10 years, or until you have withdrawn the entire $400,000.

The "40K tax-free withdrawal" strategy is a great way to enjoy your retirement savings without having to pay any income tax on your withdrawals. It is also a good way to ensure that you have a steady stream of income in retirement.
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Here are some of the benefits of using the "40K tax-free withdrawal" strategy:

• You can withdraw up to $40,000 each year tax-free for 10 years.
• You can contribute the maximum amount to your SRS account each year, which helps to reduce your taxable income.
• You can use your SRS funds to invest in a variety of products, including annuities, insurance policies, and unit trusts.

​The Supplementary Retirement Scheme (SRS) offers a versatile solution for retirement savings, tax relief, and investment growth. Evaluate your personal circumstances, weigh the pros and cons, and decide if SRS aligns with your financial goals. Here at 'The Investing Iguana,' we're passionate about assisting you in achieving financial ease and peace of mind. Stay tuned for more valuable content and insights!

​Welcome to another episode of “The Investing Iguana”, the show where I, Iggy, your friendly and fabulous host, help you navigate the wild and wonderful world of personal finance, investing, and retirement planning. Today, we’re going to talk about a topic that is very close to my heart: CPF top-ups for self-employed persons. If you’re a freelancer, a gig worker, or an entrepreneur, this blog post is for you. You might be wondering: why should I top up my CPF as a self-employed person? What are the benefits of doing so? How do I go about it? And most importantly, how can I make the most of my CPF savings for my future? Well, don’t worry, because I’m here to answer all these questions and more. By the end of this blog post, you’ll have a clear and comprehensive understanding of how CPF top-ups work for self-employed persons and how you can use them to achieve your financial goals. So let's dive in!

Before we delve into the details of CPF top-ups, let’s do a quick recap of what CPF is and how it works for self-employed persons. CPF stands for Central Provident Fund, and it’s a mandatory social security savings scheme that covers all Singaporeans and permanent residents. CPF has three main accounts: the Ordinary Account (OA), the Special Account (SA), and the MediSave Account (MA). Each account serves a different purpose: the OA is mainly for housing and education, the SA is for retirement and investment, and the MA is for healthcare and insurance.

If you’re an employee, your employer contributes 17% of your monthly wage to your CPF accounts on top of your own contribution of 20%. That means you get to enjoy a total of 37% of your income going into your CPF accounts every month. However, if you’re self-employed, things are different. You don’t have an employer to contribute to your CPF accounts. Instead, you only have to contribute to your MA based on your annual net trade income (NTI). The contribution rate ranges from 6% to 8% depending on your income level and age group.

By only contributing to your MA as a self-employed person, you might think you’re saving more cash and have more flexibility in how you use it. However, you might be missing out on some huge benefits that CPF offers, benefits that can make a big difference in your financial well-being in the long run.

1. Building Up Your Retirement Savings Faster
By contributing to your OA and SA as well as your MA, you can build up your retirement savings faster and enjoy higher monthly payouts when you retire. The OA and SA earn higher interest rates than the MA: 2.5% for OA and 4% for SA compared to 4% for MA. On top of that, you also get an extra 1% interest on the first $60,000 of your combined balances across all accounts and another extra 1% interest on the first $30,000 if you’re above 55 years old. This means you can earn up to 6% interest per year on some of your CPF savings!

2. More Options for Growth and Investment
By having more money in your OA and SA, you have more options to use them for other purposes besides retirement. For example, you can use your OA to pay for your housing loan or education loan, or to invest in various products such as stocks, bonds, unit trusts, and ETFs. You can also use your SA to invest in similar products, but with a higher risk profile and a longer time horizon. By investing your CPF savings wisely, you can potentially earn even higher returns than the interest rates offered by CPF.

3. Tax Relief for Your Contributions
You can enjoy tax relief for contributing to your CPF accounts as a self-employed person. If you make voluntary contributions to all three of your CPF accounts (OA, SA, and MA), you can claim tax relief up to the CPF Annual Limit of $37,740 or 37% of your NTI assessed by IRAS for the year of assessment (YA), whichever is lower. This can significantly reduce your taxable income, allowing you to save more money for yourself.

There are two main ways to make CPF top-ups as a self-employed person: voluntary contributions and top-ups. Voluntary contributions are contributions that you make to all three of your CPF accounts (OA, SA, and MA) in one lump sum. You can do this online or offline, and the minimum amount is $10, while the maximum amount is the CPF Annual Limit. Top-ups, on the other hand, are contributions that you make to only one or two of your CPF accounts (OA or SA or MA) in any amount and frequency.

Remember, contributing to your CPF accounts as a self-employed person has many benefits that can help you secure your financial future. By taking advantage of CPF top-ups, you can build up your retirement savings faster, enjoy tax relief, and have more options for growth and investment. So start saving smartly, investing wisely, and secure a happy retirement!