Now that we are in July, the new CPF minimum sum has just come into effect.

The CPF minimum sum is now $155,000.

The Medisave minimum sum is now $43,500 and the Medisave contribution ceiling is now $48,500.

Some people may be wondering:

**What will be the CPF minimum sum next year?**

There are 2 factors that will determine the minimum sum.

1) inflation for 2014 (which we do not know yet)

2) the $120,000 (in 2003 dollars) target for the minimum sum

Let me attempt to perform some estimates here:

Assuming an inflation rate of 3%,

Estimated 2015 CPF min sum = 155000 * 120000/117500 * 1.03 = $163047

= $163000 (rounded to nearest thousand dollars)

Assuming an inflation rate of 4%,

Estimated 2015 CPF min sum = 155000 * 120000/117500 * 1.04 = $164630

= $165000 (rounded to nearest thousand dollars)

Assuming an inflation rate of 5%,

Estimated 2015 CPF min sum = 155000 * 120000/117500 * 1.05 = $166213

= $166000 (rounded to nearest thousand dollars)

When the inflation figures are released in Jan next year, I will be able to provide a more accurate estimate. I will provide another post on the estimations in Jan 2015.

**Related post:**

CPF minimum sum 2014

CPF minimum sum for July 2014 [Predicted]

CPF minimum sum for Jul 2013 and projections for 30 years

## 4 comments:

How does CPF come up with these figures? Does anyone have a formula or does/can/will CPF show us the formula?

I could not figure out.

Below is my excel to ask...

Year MS in 2003 Diff in pr Yr MS after Inf Inf/MS2003 Less100% Incr in %

2003 80000 0 80000 100% 100% 0%

2004 84000 4000 84500 101% 100% 1%

2005 88000 4000 90000 102% 100% 2%

2006 92000 4000 94600 103% 100% 3%

2007 96000 4000 99600 104% 100% 4%

2008 100000 4000 106000 106% 100% 6%

2009 104000 4000 117000 113% 100% 13%

2010 108000 4000 123000 114% 100% 14%

2011 112000 4000 131000 117% 100% 17%

2012 113000 1000 139000 123% 100% 23%

2013 115000 2000 148000 129% 100% 29%

2014 117500 2500 155000 132% 100% 32%

2015 120000 2500

Hi,

I don't think CPF will show you the exact formula.

How I see it is that there are 2 figures that will affect the min sum.

1) ratio of the new target to the old target (e.g. 120k/117.5k for the next year)

2) inflation rate

It seems to be quite accurate. You can see my older estimation posts.

I have also done a 30 year projection based on different inflation values.

Hi,

The latest ms has been released, and it will be 161k next year. Can share your view? So after next year will the ms be increase by 4-6% or much lesser 1-2%?

Hi anonymous,

Normally, the CPF min sum is adjusted based on 2 factors

1) the inflation rate

2) the 120k (in 2003 dollars) target

The 120k (in 2003 dollars) target will be hit in 2015 (based on CPF website).

Typically, the min sum will only be announced after the inflation rate for the year is computed. However, this time, they actually announced the min sum for next year way ahead.

Working backwards, it seems that an inflation rate of 2% is assumed.

I believe that after this, it will still increase annually based on inflation rates only.

Alternatively, a fixed percentage increase (e.g. 2%) may be used to keep things simple. Using a rate like 2% will also help to ensure that the interest rates (2.5% or 4%) can catch up with the increase in minimum sum.

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