Why is extra interest used to extend the payout duration?

The Government pays an extra interest of 1% on the first $60,000 of your combined CPF balances, and an additional 1% extra interest on the first $30,000 of your combined balances if you are aged 55 and above. In other words, you can earn up to 6% on your CPF balances. This helps your CPF savings grow faster and enhances your monthly retirement payouts. 

If you are on the Retirement Sum Scheme (RSS), your RSS base payouts are computed to last for up to 20 years. This takes into account the prevailing base interest rate on Retirement Account savings, which is currently 4%. 

However, more than half of Singaporeans aged 65 today are expected to live more than 20 years. To mitigate the risk of outliving your savings, the extra interest and additional extra interest are used to extend your payouts after your base payouts have been exhausted. 

If you are on CPF LIFE, the extra interest and additional extra interest help to increase your monthly payout amount. 

Did you know? Today, more than 1 in 2 Singaporeans aged 65 can expect to live beyond 85, and about 1 in 3 can expect to live beyond 90.