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20 Aug 2019


An image of a few minature figurines standing on stacks of coins

It might be tempting to leave retirement planning to another day, or later in life, when you’ve got a higher disposable income. But the fact is that the earlier you plan, the easier it will be to meet your retirement goals, especially when you have both time and health on your side.


While there are many ways you can start growing your retirement funds, one easy and risk-free method is by optimising your CPF. 


Here are five ways to make your CPF savings work harder:

Transfer savings from your CPF Ordinary Account to Special Account if you are below age 55


Your Special Account (SA) gives you an attractive base interest rate of 4% annually — nearly twice the Ordinary Account (OA)’s base interest rate of 2.5% per year. While the bulk of your CPF contributions are automatically channelled to your OA, you can transfer these funds to your SA under the Retirement Sum Topping-Up Scheme. When compounded over time, the extra interest can give your retirement savings a significant boost!


To see how big a difference this will make, use the Rule of 72. Simply take the number 72 and divide it by the interest rate you can get with the money, and you’ll be able to find out how many years it’ll take for a sum of money to double. 


For example, if the interest rate is 2.5%, your money will double in close to 29 years. If it’s 4%, it doubles in 18 years! 


Adding the cherry to the cake — do you know that the first $60,000 of your combined CPF balances earn you an additional 1% interest per year? That means your SA savings can earn up to 5% interest per annum! 


But do remember, you can only transfer money from your OA to your SA, and not the other way round. Be sure to also consider whether you’ll need your OA to fund any big-ticket items, such as a new house, before making the transfer. 


Members below age 55 will be able to transfer their OA to SA up to the current Full Retirement Sum. You can check how much you can receive through my cpf Online Services.

An image of a smiling lady doing calculations and planning

Top up your CPF Special Account/Retirement Account with cash

Everyone loves bonus season. While it’s always nice to splurge on short-term wants, such as a holiday or a new gadget, consider setting aside a part of your annual bonus for retirement. And one easy way is by topping up your Special Account (for members below age 55) or Retirement Account (for members age 55 and above) with your bonuses!


Do note that there are limits on how much you can top up your SA or Retirement Account (RA). A simple guide is to remember that if you’re below age 55, you can top up your SA to the current Full Retirement Sum (FRS). If you’re age 55 and above, you can top up your RA up to the current Enhanced Retirement Sum (ERS).


Still need a nudge? Consider the tax relief you might receive when you top up your SA/RA with cash, up to the current FRS. This relief is equivalent to your top-up amount, up to $7,000 per calendar year. A personal income tax relief cap of $80,000 applies. Find out more about tax relief/deduction for cash top-ups here.


To make the most of this scheme, make sure you top up at the beginning of the year. Topping up in January instead of December each year will earn you more than 20% in interest over 10 years!

An infographic on the interest earned based on comparison of topping up in January versus December

Do a voluntary contribution to your MediSave Account

Another way to grow your CPF retirement savings is to do a voluntary contribution (VC) to your MediSave Account (MA), which earns a base interest rate of 4% annually. You can use your MA for certain medical care and hospitalisation expenses, which will come in especially handy after retirement. Read more about the possible uses of MA here. 


Similar to topping up your SA with cash, a VC to your MA can also earn you tax relief*. The amount you can contribute to your MA, though, is subject to the CPF Annual Limit or the Basic Healthcare Sum (BHS), whichever is lower. The BHS in 2020 is $60,000. 


To find out the allowable amount of contributions to your MA, you can use the e-cashier.


*Any voluntary contributions above the CPF Annual Limit will be refunded to members without interest and will not be eligible for tax relief. Personal income tax relief cap of $80,000 applies.

An image of a lady holding cash with a some glass jars in front of her

Balance your home loans between cash and CPF 

Buying a house is a major financial commitment that can shrink your OA considerably. But now, HDB flat buyers can choose to keep up to $20,000 in their OA when they take a loan from HDB. Previously, buyers had to use up all the funds in their OA before taking an HDB housing loan. 


This $20,000 that you leave in your OA can help service your monthly mortgage during pressing times, such as when you are in-between jobs and need help in paying your housing loan. 


If you don’t use the money and leave it in your OA, it will chalk up interest of at least 2.5% a year.

An infographic on using all Ordinary Account (OA) savings for housing or setting aside $20000

*OA to SA transfers are only applicable for members below age 55.

Withdraw your CPF later 

You have the option of withdrawing a portion of your CPF retirement savings from age 55. Members can take out up to $5,000 from their SA and OA, or what’s left in their OA and SA after they have set aside their Full Retirement Sum (FRS), or the Basic Retirement Sum with property*.  


* The property you own must have remaining lease that can last you till age 95.


However, it is not a must to take out your CPF savings when you reach 55 — you can do so at any time after that. You can also make a partial withdrawal, leaving some funds in your account for future use. By withdrawing at a later date, your CPF savings can continue to grow at the attractive interest rates earned in your accounts.


To kickstart your retirement planning, you can use this interactive tool to determine if your goal is achievable!