This is a common misconception. The Basic Retirement Sum (BRS), Full Retirement Sum (FRS) and Enhanced Retirement Sum (ERS) are not fixed amounts, but a range of retirement sums of how much you will need to cover the cost of living in retirement.
You will still get monthly payouts even if your CPF savings are lower than the retirement sums.
Even if your CPF savings are lower than the different retirement sums, you will still receive monthly payouts from your payout start age (between 65 and 70). The amount of retirement payouts you receive will depend on your Retirement Account savings and choice of CPF LIFE plans.
Setting aside the BRS will allow you to take care of your basic needs in retirement, assuming you own your home and do not have to pay rent. The FRS and ERS allows you to set aside twice and thrice the amount of BRS respectively to enjoy proportionately higher monthly payouts.
Basic, Full and Enhanced Retirement Sum are not fixed amounts you have to select.
They are simply reference points of how much you will need to cover basic cost of living in your retirement. The monthly payout amount you wish to receive and the Retirement Sum you will need to set aside depend on your Retirement Account savings and cost of your desired retirement lifestyle.
To account for inflation and rising standards of living, the retirement sums will increase annually so you have greater certainty on future adjustments. Once you turn 55, the sums applicable for you are fixed.
To help plan for your retirement early, the BRS and thus FRS and ERS for subsequent years will also be made known ahead of time.
Basic Retirement Sum (BRS) for members turning 55 between 2016 and 2020 and corresponding monthly payout for life.