The CPF system, at its very core, serves to provide for your retirement needs through CPF LIFE, a national lifelong annuity scheme.
Several major changes happen to your CPF accounts when you turn 55.
Simultaneously, your combined balances from your Ordinary Account (OA) and your Special Account (SA) is transferred into this Retirement Account (RA). Should you shield CPF Special Account?
At 55, you start receiving an extra additional interest of 1% on the first $30,000 of your combined CPF balances. This interest is paid into your Retirement Account to help grow it faster. This is on top of the additional 1% interest you receive on your first $60,000 of your combined CPF balances.
Your accounts are used to compute your combined CPF balances in the following order:
– 1st: RA including any CPF LIFE premium balance
– 2nd: OA, with a cap of $20,000*
– 3rd: Special Account (SA)
– 4th: MediSave Account (MA)**
*A cap of $20,000 from OA is imposed because OA savings are short-term in nature and can be withdrawn on demand for a few purposes such as housing and education.
**Basic Healthcare Sum raised to $66,000 in 2022
The Full Retirement Sum (FRS) is the default plan. Choosing to go on the Basic Retirement Sum (BRS) will require you to have sufficient property charge and/or pledge your property. The Enhanced Retirement Sum (ERS) is not actually a third option, but a maximum cap on the amount you can top-up your Retirement Account to after you turn 55. Before 55, you can top up your Special Account up to a maximum Full Retirement Sum.
Even if you cannot meet the retirement sum, you can still withdraw up to $5,000 regardless of how much (or little) CPF balances you have.
You can also withdraw anything above your Full Retirement Sum at age 55. If you have pledged our property, you can withdraw anything above the Basic Retirement Sum (less any top-up monies).
Of course, you can also leave all our funds within the CPF system to grow for a bigger CPF in the future.
You can choose to stop your Ordinary Account balances from flowing into Retirement Account.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Mui Huang works with financially secure families to achieve their most important values. She believes strongly in an unbiased, independent financial advisory model and the value that her clients derive from it, be it goal planning, tax, investments, insurance, mortgages or wills and trusts.
She graduated with a Bachelor of Business from Nanyang Technological University (NTU) in 1995. Since 2006, she has been a CFA Chartered Holder (Certified Financial Analyst). She also holds a Certificate in Trust Services from NTU’s Wealth Management Institute.
In her personal time, she enjoys exploring nature trails and cloudspotting.
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