Can I reserve my Ordinary Account (OA) savings for my child's tertiary education, so that the savings are not transferred to the Retirement Account (RA) when I turn 55?
As your Ordinary Account (OA) savings are meant to boost your retirement savings when you turn 55, you will not be able to reserve your OA savings for your child’s tertiary education. At age 55, your Special Account (SA) and OA savings will be transferred to your Retirement Account (RA) to meet the Full Retirement Sum (FRS) applicable to you. Your RA savings will earn an attractive interest rate of up to 6% per year and provide you with lifelong monthly payouts in retirement. You are eligible to withdraw in cash the remaining OA and SA savings after setting aside the FRS, or up to $5,000 if you are unable to set aside the FRS. You can then use the cash as you wish, including towards your child’s education.
You may wish to consider the MOE’s Tuition Fee Loan (TFL) to finance your child’s education. The TFL is available to all full-time students of the polytechnics and universities and covers up to 75% and 90% of the tuition fees payable respectively. It is also interest-free during the course of study, unlike the CPF loan where interest starts to accrue from the time of withdrawal.
Additionally, being a loan from MOE, the TFL repayment and interest can be suspended in periods of economic downturn. For instance, MOE has suspended the TFL repayment and interest from 1 June 2020 to 30 September 2021 to support households affected by Covid-19, and had done so in the past as well. On the other hand, repayment of the CPF education loan and interest cannot be suspended as it is to restore the member’s CPF savings for his retirement needs, and retirement security remains important, if not more so, during economic downturns.
Your child can also approach his
educational institution to find out about the other financial assistance schemes available.
