Update to CPF Basic Healthcare Sum (BHS) Projection for 2025

This Opinion post first appeared in my blog here: https://pwlcm.wordpress.com/2024/12/11/update-to-cpf-basic-healthcare-sum-bhs-projection-for-2025/

Refer to the list of acronyms on CPF in the following blog post:
https://pwlcm.wordpress.com/2022/01/06/acronym-cpf/

I am a CPF Volunteer. If you find this blog post providing useful information about CPF matters and it leads you to using CPF online services, you may fill in my full name “Tan Choong Hwee” in the “Referrer Name” field in some selected CPF online services.

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Today (11 December 2024) CPF Board announced that the Basic Healthcare Sum (BHS) for 2025 is $75,500:
https://www.cpf.gov.sg/member/infohub/news/news-releases/cpf-interest-rates-from-1-january-to-31-march-2025-and-basic-healthcare-sum-for-2025

The announced 2025 BHS amount is $1,000 more than what I had projected in my blog post:
https://pwlcm.wordpress.com/2023/12/06/update-to-cpf-basic-healthcare-sum-bhs-projection-for-2024/

The % increase of BHS amount from 2023 to 2025 had been on an up trend: +3.79%, +4.38% and +5.59%. This is reflective of the increasing medical inflation. I will get the exact $75,500 BHS amount if I set the 2025 % increase of BHS to be rounded to 5.5% and the nearest multiples of $500.

The question remains, what rate of increase should I use to project future BHS? I think it will likely be continuing on an up trend for the next few years, but I can't imagine it keeps increasing to a significant level, a level where it becomes difficult to achieve for the second quintile population, the group whom CPF is originally designed to address.

The BHS inflation for 2025 is +1% more than the previous year BHS. I'm going to arbitrarily assume that the +1% BHS inflation will continue for the next 3 years (i.e. 6.5%, 7.5%, 8.5% in subsequent years), and it will remain flat (i.e. 8.5%) beyond.

With the above consideration, I have revised the BHS Projection spreadsheet up to 2030, which was cut down from 204o in last year projection because the further into the future means the larger the projection error, and it becomes meaningless projections. The revised table is shown below:

Let's see how well the projection for 2026 BHS turns out to be in one year time.