4 ways to maximise and grow your CPF savings for retirement


If you don’t have time to read through the whole article, you can check out our short version below:

Tips to grow your CPF retirement pot:

Transfer from CPF Ordinary Account to Special Account.

Pay your mortgage in cash.

Top up your Special Account.

Also, remember to always evaluate your personal financial situation before making any decision.



The Central Provident Fund (CPF) is a key part of life in Singapore. In fact, if you’ve ever worked before, you probably have a CPF account. And CPF is a crucial part of most Singaporeans’ financial plans. After all, it is Singapore’s version of social security.

Some use it for their house purchase, and some use it to pay for their children’s university tuition fees.

Others treat it like a risk-free “investment” and withdraw it only when they reach 55 years of age. That’s because they treat CPF like a very low risk, AAA-rated government bond. (CPF isn’t a government bond, but it is possible to get up to 4% returns annually from your CPF.)

If you don’t mind saving your money in CPF till you’re 55, here are 4 ways to maximise and grow your CPF savings for retirement:

The CPF Special Account (SA) pays higher interest than the Ordinary Account (OA). Knowing this, you can transfer the money in your OA to your SA to earn the extra interest.

The CPF-OA pays 2.5% interest annually, while CPF-SA pays 4%. While the extra 1.5% may not seem like much, it makes a big difference when compounded over time.

(You get extra 1% interest for the first S$60,000 in your combined CPF-OA and CPF-SA balances too, but we’ll exclude that here for ease of calculation.)

For example, let’s assume you transfer the maximum allowed to your SA. That’s referred to as the Full Retirement Sum, and is S$171,000 (as of 2018). After 30 years of compounding at 4% per annum, your funds grow to S$554,620.97.

But if you had left that amount in your CPF OA that earns 2.5% interest, you’d end up with S$358,684.06 – nearly two hundred thousand dollars less.

So it makes sense to park your money in the SA to earn the higher interest.

But there is a catch: it is a one-way trip. You can only transfer money from your OA to SA, but not the other way.

So, if you need the money in your OA to fund your home purchase in the near future, you might want to put off doing this.

But if your housing needs are comfortably taken care of, transferring money to your SA will go a long way toward your retirement — which brings us to the next point…

Besides using CPF-OA to fund the 20% downpayment for a home, many Singaporeans also use it to service their monthly mortgage.

But if you can afford to, there are several advantages to paying your mortgage in cash.

  • The main benefit is that it’ll allow your CPF monies to compound much further, especially if you transfer it to the SA.
  • In the meantime, your CPF-OA can be “back up” funds in case something goes wrong, and you need to stop servicing your mortgage with cash. This means you won’t have to worry about losing your home in the event of emergencies such as a sudden retrenchment.

If the amount in your SA hasn’t reached the Full Retirement Sum, you can also make a voluntary cash top-up. Effectively, this means your SA is like a bank saving account — albeit one that pays you 4% interest and can only be withdrawn from age 55.

Cash top-ups come with a tax relief equivalent to your top-up amount, up to S$7,000 per calendar year.

Another good tip: make your top-up at the beginning of the year. That’s because CPF interest is calculated monthly. If you top up in January each year instead of December, you’ll earn 20% more interest over 10 years.

If you plan on making voluntary cash top-ups to your SA, consider topping-up your MediSave Account (MA) first. Your MA also earns the same 4% annual interest as the SA, but has the added flexibility of being available for your medical care and hospitalisation expenses.

Currently, you can contribute a maximum of S$54,500, which is the Basic Healthcare Sum as of 2018. This will earn you an annual interest of S$2,180, which you can use to pay your MediShield Life annual premiums.

The interest earned in your MA covers even the most expensive premium for MediShield Life. In essence, adequately funding your MA can pay for your health insurance in Singapore.

Voluntary contributions to your MA also allows you to claim a tax relief. All the more reason to make a contribution if you’re already planning to do so.


These are the 4 simple things you can do right now to maximise and grow your CPF savings for retirement. As good as it sounds, remember to always evaluate your personal financial situation before making any decision.

For example, voluntarily topping up your SA may be a great idea if you have excess cash that you won’t need in the near term, but may not work if you’re facing a tight financial situation right now and need the money for more pressing things.

Just like any other financial instrument, the CPF can be a great tool to help you achieve your retirement goals if you use it right.

This article, which first appeared on The Fifth Person, is reproduced with edits and permission.

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