Increase in BHS and FRS 2019

I am a big advocate of the 7k CPF top-up. In fact, I’ve been doing it myself for the last 4 years. The primary reason to do these top-up’s are mainly for their tax saving benefits and additional interest earned.

Though recently, I’ve been wondering if the 7k is indeed sufficient to hedge against the rise in CPF ceiling rates, or am I subject to some anchoring bias since only 7k transfer is tax deductible?

Increase in CPF ceiling rates was 7.7k in 2019 and 7.8k in 2020
Source: CPF website

A quick check on BHS and FRS ceiling changes shows that the overall quantum has been raised by more than 7k in the last 2 years. Which means without accounting for other contribution increases (mainly salary and interest received), if you only transferred 7k in the last 2 years you would be behind in achieving these CPF ceiling rates.

Therefore, starting this year I will be pegging my CPF contribution rates to these rising quantum’s rather than on the 7k baseline. Hope this post helps you to better frame your CPF retirement planning.