A Special Account is one of three components of the Singapore CPF(Central Provident Fund) public retirement system. The other two are the ordinary account and the Medisave account.
An ordinary account: It is a savings account you save for housing, insurance policies, investments, and education purposes.
A Medisave Account: The account keeps a basic medical sum saved to pay for hospitalization, approved medical insurance policies.
A Special Account: It is a savings account for your future retirement or used to purchase investments related to retirement.
In 2021, the Singapore parliament passed an amendment bill that changed the current retirement system. The changes may affect your incoming retirement because it focuses on the Special Account. Let’s see the new features.
Know Your CPF Special Account
- Besides earning 4% per year, you can earn an additional 1% of the first S$60,000 of your Ordinary, Special Account, Medisave account combined if you are 55 or below. That is a 5% interest rate per annum.
- And if you are 55 or above, you earn an extra 2% of the first S$30,000 of the balances from the accounts combined and an additional 1% for the next S$30,000. The interest rate for parts of your savings can be 6% per annum.
- You will see the extra interests credited to the Special Account or Retirement Account. One requirement is to maintain a minimum of S$20,000 in your Ordinary Account for additional interest benefits.
- CPD board reviews interest rate policy quarterly and calculates the interest rates based on the 12-month average yield of the Singapore Government’s 10-year government securities(YSGS) plus 1% but not less than 4% interest rate floor.
- The new amendment bill 2021 increases the legal retirement age from the current age of 62 to 65. And the re-employment age rises from the current age of 67 to 70.
- The bill also increases the contribution rates for different age groups: For persons aged 55 to 60: the contribution percentage rises from 26% to 37%; for people aged 60 to 65: the rate rises from 16.5% to 26%; for persons aged 65 to 70: the rate increases from 12.5% to 16.5%, other age groups remain the same. The withdrawal age remains at 55.
Pros Of Putting More Money Into Your CPF SA
- Reasonable rates of return: CPF SA provides higher and stable rates of return than most banks offer. Banks in Singapore offer 0.5% to 1.4% fixed deposit rates, not to mention the much lower savings rates. The 5% to 6% range is attractive for CPF members. The return from the CPF SA is also an inflation beater.
- Guaranteed rates: The Central Provident Fund Board reviews interest rates quarterly. It determines the rates based on the Government’s 10-year securities plus a premium. Therefore, your CPF’s savings enjoys a guaranteed backup from the Government.
- Flexible investment options: If you want higher returns, you can turn to CPF’s broad approved list of offers like investment-linked insurance products, annuities, and other options. They embrace risk from high to low. You may increase your retirement sum if you can tolerate higher risks.
- Free from creditors: What’s more, your hard-earned savings in CPF is free from your creditors. If unfortunately, you go bankrupt during this period, your CPF accounts are protected by law from creditors, which distinguishes your CPF from banks and other financial institutions.
What Is The CPF Retirement Sum, And How To Make The Most Out Of It
The Central Provident Board says a retirement sum is an amount you’ll need to live a basic standard of living when you retire at age 55. The scheme will set up a Retirement Account for you to move savings from your Ordinary and Special Accounts to the Retirement Account. The CPF Board establishes 3 kinds of retirement sums for members. Let’s look at the table:
|Aged 55 at the year||Basic retirement sum(BRS)||Full retirement sum(FRS=BRSx2)||Enhanced retirement sum(ERS=BRSX3)|
The above table lists 3 kinds of retirement sums; the CPF Board says if you need a better living standard, you should save more to reach the goals like Full Retirement Sum or Enhanced Retirement Sum. The CPF Board has a CPF Life scheme and uses the information to calculate the monthly payouts to members.
The Board adjusts the amounts regularly to keep in pace with the cost of living and usually adds annual 3% increments into the basic retirement sum and other toys of retirement income. You may not be worried about lagging behind the living costs after you become a member of the payout scheme.
Prevailing Retirement Scheme
The prevailing retirement scheme is popular among members choosing lifetime payouts. They are the accumulated savings designated by the CPF board and converted into CPF Life payouts adjusted for inflation. But an alternative is available.
You may choose the Retirement Sum Scheme to receive monthly payouts if you have less than S$60,000 in your Ordinary and Special Accounts combined, and you have already had other private annuity services. You may choose your tailored-made payouts until the funds are depleted.
What Happens When You Achieve the Retirement Sum?
Congratulations! You are halfway to a good retirement life. Before proceeding, you may be interested in looking at some detail of the CPF Life scheme:
|Monthly payout age at 65||Savings you need at 65||Savings you need at 60||Savings you need at 55|
|S$350 – 370||S$60,000||S$45,800||S$35,500|
|S$540 – $570||S$97,300||S$76,000||S$60,000|
|S$770 – $830||S$145,200||S$115,400||S$93,000|
|S$960 – $1,030||S$184,400||S$147,600||S$120,000|
|S$1,430 – $1,530||S$280,200||S$226,300||S$186,000|
|S$1,520 – $1,640||S$300,600||S$243,000||S$200,000|
|S$2,080 – $2,230||S$415,300||S$337,300||S$279,000|
From the table, you need to have a median sum of S$120,000 at age 55 if you want to have a paycheck of about S$1,000 every month on average.
The minimum requirements for a retirement life vary. However, you should consider several factors before choosing an appropriate one. They are the time for retirement, payout amounts, cost of living.
Time for retirement: The longer you defer your retirement, you may accumulate more savings for a comfortable retirement.
Payout amounts: The more you defer your retirement, the more your payout amounts are.
Cost of living: If you think the cost of living increases every year, you should save more to reach a standard living level.
How to Achieve Your Retirement Sum Faster
Besides the factors, you may consider a proactive approach to increasing your savings for early retirement. The following are some steps you may take to improve your retirement sum:
- Transfer your funds in the Ordinary Account to the Special Account: You can earn an extra 1.5% interest on the funds in the Ordinary Account if you do this. For example, you have S$40,000 in your Ordinary Account. If you transfer S$20,000 to the Special Account, you may earn an extra S$300 each year.
And remember, the transfer is not reversible; you may lose other benefits like housing or education.
- Top up your retirement sum: You can increase your contributions to reach the Full retirement scheme in your Special Account before 55 and the Enhanced Retirement Scheme in your Retirement Account after 55.
- Tax Relief: The amendment bill allows tax relief up to S16,000 contributions each year($$8,000 for a member, the other S$8,000 for his siblings). You may make full use of the relief to save more.
- Invest in increasing return: The scheme allows members to use the funds(except the first S$20,000 in the Ordinary Account and S$40,000 in the Special Account) to purchase investment products on the approval list.
They include unit trusts, insurance policies, bond funds, exchange-traded funds, fund management accounts, annuities. Members can also buy shares, corporate funds, and property funds, but the investments are subject to 35% of the investible savings in the account. Members should restrict their gold investments to 10% of the investible savings.
Members should consult their financial advisors before investing as the products involve higher risks than interest-bearing products.
- Holders of the Special Account can invest in moderate-risk insurance policies, annuities, and endowment policies besides treasury bills and Government bonds.
We’re Answering Some of Your Most Asked Questions
1. What are the differences between private annuities and CPF Life?
The Singapore Government guarantees up to 6% for the first S$60,000 of your funds in the CPF accounts. The high rate is appealing to bank depositors alike. Moreover, the private annuities payouts vary depending on rates of return and individual mortality rates. Therefore, you should examine before choosing a personal pension.
2. How to take part in a CPF Investment Scheme if I want to increase fund’s return?
You should meet the following before investing in other products:
- You are 18 of age;
- You are not uncharged bankrupt;
- You have more than S$20,000 in the Ordinary Account and S$40,000 in the Special Account for investment purposes.
- You take a Self-Awareness Questionnaire to understand 1. your risk tolerance and levels; 2. your understanding of financial products relating to costs and risks in the market.
3. Can I Withdraw my Savings Earlier if I Have a Serious Health Condition?
Yes, you can withdraw the funds in your CPF savings accounts if a medical practitioner, approved by the Board, verifies your medical condition deeming you having a short life expectancy.
4. Which Account: the Ordinary Account or The Special Account, should I take the Funds out to make the First Withdrawal?
Members should withdraw funds from the Special Account first because the CPF Board states the account is for long-term funds.
5. Are There CPF Special Account Ceiling for CPF Members?
Yes, if you are under 55, you cannot save more than the Full Retirement Fund(S$186,000) designated by the CPF Board. If you are 55 or over, the Special Account should not be over the Enhanced Retirement Fund(S$279,000).
6. What is a Basic Healthcare Sum(BHS)?
It is an estimate of your future medical expenses. Using the statistics from MediSave, the CPF Board forecasts the sum, which is the reserve for future medical expenses, premium for medical insurance policies, and long-term care expenses.
7. Are CPF Life Payouts Guaranteed?
No, the payouts are not guaranteed. But the payouts are backed up by the Singapore Government, and adjustments made only due to the cost of living are small and gradual.
8. Can the self-employed member make voluntary top-ups to CPF accounts? Is there any limit to the top-up limits?
A self-employed member can contribute voluntary top-ups to 3 CPF accounts: Ordinary, Special, and MediSave. However, there is a limit to what he can contribute; he cannot put more than the differences between the CPF annual limit of S$37,740 and the mandatory contributions for a calendar year. Any excess contributions will be refunded with any interest.
9. Do I need an Investment Account for the CPF Investment Scheme – Special Account (CPFIS-SA)?
If you use the Special Account scheme for investment activities, you do not require another account for doing this. Investing service providers like insurance companies, banks, or brokerages can directly link up with your Special Account.
Our Final Thoughts
You may increase your wealth through a CPF Special Account by taking advantage of its high-interest offers and investing in ETFs or investment-linked insurance products for more growth. Read more on how to use CPF to invest.
Here are our key takeaways:
- Tax relief for cash top-ups
- Grow the funds in the Special Account for a fast buildup of wealth
- Make use of up to 6% interest rates offered by the Special Account
Deciding on where to invest for your retirement savings takes quite some reviews and analysis to consider. But when you need a fast cash loan for any situation, especially when matters require a quick solution, you can always rely on Instant Loan.
Our intelligent loan comparison service lets you skip the time-consuming review and provides you with up to three customized loan quotes from the country’s leading licensed moneylenders. Smart borrowers use a smart solution. Get your free quotes today!
It must also be noted that there is a cap to your Medisave Contribution (which is up to $63,000 as of 2021) and Special Account (which is up to S$186,000 as of 2021).What is the maximum amount for CPF special account 2022? ›
The maximum amount you can top up is the difference between the CPF Annual Limit of $37,740 and the mandatory CPF contributions made for the calendar year.Can special account exceed full retirement sum? ›
There is a limit on how much we can top-up in our Special Account before 55: this is capped at the current Full Retirement Sum. If we are 55 and above, the maximum amount we can have in our Retirement Account is the Enhanced Retirement Sum (or 1.5 times the FRS).What is the special account ceiling? ›
Are There CPF Special Account Ceiling for CPF Members? Yes, if you are under 55, you cannot save more than the Full Retirement Fund(S$186,000) designated by the CPF Board. If you are 55 or over, the Special Account should not be over the Enhanced Retirement Fund(S$279,000).What happens after special account is full? ›
When you reach 55 years old, your Special and Ordinary Account savings, up to the Full Retirement Sum (FRS), will be transferred to a Retirement Account. You can withdraw the remaining savings, if you wish, after setting aside the FRS.What happens to special account after 55? ›
When you turn 55, we will transfer your CPF savings, up to your Full Retirement Sum (FRS), to create your Retirement Account (RA). Your Special Account (SA) savings will be transferred first, followed by your Ordinary Account (OA) savings.How much can I withdraw from special account? ›
$5,000 or your Ordinary and Special Account savings above the Full Retirement Sum, whichever is higher.Should I top up CPF special account? ›
Making cash top-ups or CPF transfers to your Special or Retirement accounts can help you grow your retirement savings. Besides benefiting from compounding interest and higher monthly payouts when you retire, you can enjoy tax relief at the same time.How is CPF special account calculated? ›
CPF Members currently earn an interest of 2.5% for the Ordinary Account (OA) and 4% for the Special (SA), Medisave (MA) and Retirement Account (RA). There is an additional 1% paid on the first $60,000 of your combined CPF balances, with up to $20,000 from the OA.Can I transfer from OA to SA after 55? ›
If you are below age 55, you can transfer your OA savings to your SA to earn higher interest. If you are aged 55 and above, you can set aside more savings for your needs in retirement by transferring your SA or OA savings to your RA2.
Overestimating Your Replacement Rate
The perils of saving too much for retirement include causing unnecessary financial stress, such as struggling to pay your mortgage or for one of life's unexpected and costly emergencies. His research concluded that the actual range of replacement rates is between 54% and 87%.
If excess contributions have been made, employers and employees can apply for a refund. All refund applications should only be submitted when the employee's Total Ordinary Wages for the year are known and the Additional Wage (AW) ceiling is finalised, usually after the end of year or in the last month of employment.Should I top up CPF SA or MA? ›
Therefore, in terms of tax relief, there is no difference whether a CPF member chooses to perform a cash top up to his MA or SA. Having established that there is no difference in terms of tax relief, let us now understand how our cash top up will be treated in each of CPF MA and SA.What is the maximum amount in Retirement Account? ›
For members who turn 55 in 2022, their Basic Retirement Sum (BRS) is $96,000, their Full Retirement Sum (FRS) is $192,000 and their Enhanced Retirement Sum (ERS) is $288,000.What percentage goes to special account? ›
What is the CPF interest rate?
|Account name||Current interest rate|
FAQs. Can I use my Special Account savings to make a lump sum payment for my housing loan? As your Special Account savings are meant for retirement, only your Ordinary Account savings can be used to make a lump sum payment for your property.Is it better to transfer Ordinary Account to special account? ›
Transfer from Ordinary to Special Account
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%.
Generally, members can withdraw at least $5,000 or any amount in excess after setting aside their Full Retirement Sum from 55. From 65, members born in 1958 and after can withdraw an additional amount of up to 20% of their retirement savings at 65.What age can withdraw CPF Special Account? ›
You can withdraw at least 20% of your retirement savings, either from 55 or 65 depending on your birth year. This includes the first $5,000 withdrawable at any time after 55.How many times can I withdraw from CPF after 55? ›
You can make as many withdrawals as you like from your withdrawable savings. So there's no need to take everything in one go.
Transferring OA To SA
A second way to maximise your CPF savings would be to transfer your money from OA to SA. This would allow you to earn the higher interest of 4% from SA rather than the 2.5% from OA.
Under the revision to Regulation D announced in 2020, the Fed has loosened requirements for how banks treat savings deposits. Instead of limiting bank customers to six convenient transfers or withdrawals from a savings or money market account per month, Fed rules now allow for unlimited transfers or withdrawals.How can I maximize my CPF special account? ›
- 5 Ways to Optimize Your CPF. ...
- Step 1: Voluntary MediSave Account (MA) Top Up.
- Step 2: Voluntary Special Account (SA) Top Up.
- Step 3: Transfer excess balance from Ordinary Account (OA) into Special Account (SA)
- Step 4: Special Account (SA) Shielding.
You should top up as early as possible to benefit from the power of compound interest over the years. You can also earn more interest if you top up earlier in the year. For example, if you top up in January each year instead of in December, you can earn up to 20% more interest on your top-ups in 10 years.How to earn 1 million in CPF? ›
- Transfer funds from Ordinary Account to Special Account. ...
- Top up your Special Account. ...
- Enjoy tax reliefs by topping up your parents' accounts. ...
- Make voluntary CPF contributions. ...
- Top up in bite-sized amounts.
At age 30, some financial professionals suggest accumulating the equivalent of your current annual income. By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10-12 times your income at that time to be reasonably confident that you'll have enough funds.How much retirement should I have at 55 CPF? ›
On your 55th birthday, we will create a Retirement Account for you. Savings from your Special Account, followed by your Ordinary Account, up to your Full Retirement Sum of $181,000, will be transferred to your Retirement Account to form your retirement sum which will provide you with monthly payouts.Can I transfer my Ordinary Account to special account after 55? ›
Can I transfer my Ordinary Account savings to my Special Account to earn a higher interest rate? No, you will not be able to make CPF transfers to your Special Account (SA) after you turn 55. The Retirement Account (RA) was created for your retirement needs when you turned 55.How much OA can transfer to SA? ›
The maximum amount you can transfer from OA to SA is the difference between the current Full Retirement Sum of $186,000 and the sum of our current SA funds and the net SA withdrawn under the CPF Investment Scheme (CPFIS-SA) for investments that have not been completely disposed of.Can I transfer money from CPF ordinary account to special account? ›
Members are advised to plan the use of their CPF carefully before making the transfer as it is irreversible. If you are using your CPF to repay your existing housing loan, or considering to buy a property, please plan carefully.
|Top Up SA with cash||Higher risk-free interest rate as compared to money in the bank Enjoy tax relief of up to $7,000 a year|
|Leave it as it is||Enjoy flexibility of both OA and SA Might have potential to jump into the property market in the future|
At age 65, a person can retire on 3 million dollars generating $201,900 a year for the rest of their life starting immediately. At age 70, a person can retire on 3 million dollars generating $220,500 a year for the rest of their life starting immediately.How long will 1.5 million last in retirement? ›
For example, if your money is sitting in the bank without earning any interest and you withdraw $5,000 per month or $60,000 per year, 1.5 million dollars for retirement will last for about 25 years. In the same scenario, but with a 3% return on investment, your money will last for 45 years and 3 months.Is 4 million enough to retire at 65? ›
Is $4 million enough to retire at 65? Yes, you can retire at 65 with four million dollars. At age 65, an annuity will provide a guaranteed level income of $269,200 annually starting immediately for the rest of the insured's lifetime. The income will stay the same and never decrease.Does topping up CPF reduce tax? ›
You can enjoy tax relief for cash top-ups made in each calendar year of up to: $8,000 if you make a top-up to yourself; and. an additional $8,000 if you make a cash top-up to your loved ones.Can I keep my CPF after 70? ›
No, you cannot defer your monthly payouts beyond 70. The purpose of your retirement savings is to provide you with a stream of retirement income. If you do not have an immediate need for your monthly payouts, you can consider investing them outside the CPF system.What is CPF capping? ›
The total monthly salary of a person is the aggregate of OW (ordinary wage) and AW (additional wage). The maximum cap for OW is different from AW. CPF contribution ceiling for OW is capped at $6000 per month. You or your employer cannot make any contributions to your CPF account for the OW that goes beyond $6000.How much can CPF Special Account invest? ›
In addition, you can only invest up to 35% and 10% of your investible savings in stocks and gold, also known as the stock and gold limits. Investible savings refers to the sum of your OA balance and the amount of CPF you've withdrawn for investment and education.How much can I withdraw from CPF Special Account? ›
You can withdraw at least 20% of your retirement savings, either from 55 or 65 depending on your birth year. This includes the first $5,000 withdrawable at any time after 55.
Under the Retirement Sum Topping-Up Scheme (RSTU), you can top up your Special Account (SA) if you are below age 55, or Retirement Account (RA) if you are aged 55 and above, via CPF transfer or cash. If you wish to support your loved ones' retirement saving goals, you can also top up their SA or RA savings for them.
Under the Ordinary Wages component, which is typically our monthly salaries, the CPF contribution ceiling is capped at $6,000 per month. This means only the first $6,000 of our monthly salaries require CPF contributions from us and our employers.Should I transfer money from OA to SA? ›
Transferring OA To SA
A second way to maximise your CPF savings would be to transfer your money from OA to SA. This would allow you to earn the higher interest of 4% from SA rather than the 2.5% from OA.
Generally, members can withdraw at least $5,000 or any amount in excess after setting aside their Full Retirement Sum from 55. From 65, members born in 1958 and after can withdraw an additional amount of up to 20% of their retirement savings at 65.Can money from special account be withdrawn? ›
For the uninitiated, when you turn 55, you can withdraw: $5,000 or your Ordinary and Special Account savings above the Full Retirement Sum, whichever is higher.When can I take out my special account money? ›
You will only be able to withdraw savings in the CPF SA when you reach the age of 55, which is when the savings from the SA will be transferred to your retirement account. This retirement account can then be used to join CPF Life, which offers lifelong monthly payouts to CPF members.