The Central Provident Fund (CPF) is a compulsory social security savings scheme in Singapore that aims to help individuals save for their retirement, healthcare needs, and housing purposes. While contributing to CPF retirement funds may seem like an added financial burden, it actually has numerous benefits for your future. Here are two major benefits of contributing to CPF retirement funds.
1. Guaranteed Savings for Retirement
By contributing to your CPF retirement funds, you are essentially saving for your future retirement. With the rising cost of living and longer life expectancy, having enough savings for retirement has become increasingly crucial. CPF offers a guaranteed interest rate of at least 2.5% on your Ordinary Account savings and up to 6% on your Special and MediSave Accounts. This means that your CPF retirement funds will continue to grow over time, providing you with a stable source of income during your golden years.
2. Additional Tax Relief
As an employee, you are required to contribute 20% of your monthly salary to your CPF account, while your employer contributes an additional 17%. Not only does this contribute to your retirement savings, but it also provides you with a tax relief. The CPF contribution made by both you and your employer is deductible from your taxable income, reducing the amount of income tax you have to pay. This means more