Do you know? CPF Medisave Account has a contribution ceiling

Since Jul 2014, our CPF Medisave Account (MA)'s Maximum Sum* has been increased to $48,500.

After fulfilling the MA's Maximum Sum, excess Medisave contributions will flow to the Special Account (if below 55 years old) or Retirement Account (if above 55 years old).

In other words, the earlier you hit your MA's Maximum Sum, the faster you can grow your Special Account (Hint: See how I did not mention about growing your Retirement Account?) for retirement needs!

Now you know!

* What is the "Maximum Sum"? The term "Maximum Sum" does not exist anywhere else on the Internet because this is an original term that I have coined to represent the reverse meaning of "Minimum Sum".

Why it's wise to keep money in CPF

The Sunday Times published an informative article about CPF LIFE on 15 Feb 2015. What intrigued me are the following views shared by Mr Colin Pakshong, an independent actuarial consultant.

Question: How does CPF Life compare with private annuity plans? 

CPF Life is very competitive. It is supported by special government bonds; so, for the same premium, it would be difficult for a private annuity plan to offer the same level of payout.

Question: How do the CPF Life's returns compare with stocks and bonds' returns?

The returns are also very competitive, particularly once risk is taken into account.

There will be some periods when a portfolio of stocks and bonds provides a better return, but over the years during which the payouts will be made, CPF Life is likely to provide better and much more stable returns.

. . .

It's certainly possible that some members will earn higher returns (from stocks and bonds), but past experience from the CPFIS shows that most members would have been better off leaving their money in the CPF.

Even professional fund managers find it difficult to produce superior returns on a consistent basis.

Mok, F. (2015, February 15). Why It's Wise to Keep Money in CPF, pp. 26-27.