Using CPF accounts to your advantage

When it comes to using our CPF accounts, many Singaporeans would think of only using it for their housing needs. While this might not necessarily be wrong, there are actually more ways in which our CPF accounts can be used to our advantage.

In this post, I will be sharing some of the other ways in which you can utilize your CPF accounts.

Do note that you should not blindly follow these methods as each of them have their own trade-offs. Rather, you should assess your own circumstances and decide if these methods would be beneficial to you or not.

With that said, let’s dive right in.

Making CPF a foundation for retirement

When CPF was first introduced in 1955, it was established as a system for Singaporeans to build up their retirement savings. It was only later down the road was the system expanded to provide for Singaporeans’ housing and medical needs. If you are interested in the history and rationale of the CPF system, you can find out more about it here.

As such, making your CPF accounts a foundation for your retirement can be seen as returning to the roots of the system itself.

Now, how exactly do we do that with our CPF accounts? Well, focus on building up your Special Account (SA).

Using your SA as a heavy lifter for retirement

The reason for focusing on your SA for retirement is down to its higher base interest rate.

CPF interest rates
Source: CPF Board

As seen, the SA has a higher interest rate of 4% per annum as compared to 2.5% for your OA. This means that by focusing on your SA, it would grow at a much faster pace due to the effects of compound interest.

One thing to note though is that the interest rate is subjected to a quarterly review by CPF. Hence, there is a possibility that it might change in the future. However, based on CPF’s historical interest rates, political and economic reasons (which I would not delve into here), I do not expect the interest rate to drop any time soon.

With the higher interest of the SA coupled with the effects of compound interest, we would have higher funds to tap on for our retirement. This is especially true if you start planning for your retirement via CPF at an early phase of your working life.

In addition to earning a higher interest rate, we also need not worry about our CPF monies.

A strong retirement safety net

If you do not already know, our CPF monies are guaranteed by the Singapore government. For those interested to know how our CPF funds are used, you can read more about it here.

In short, CPF monies are used to purchase special debt instruments (SSGS) from the Singapore government. The proceeds gained by the government from the issuance of such debt instruments are then pooled together with other income sources, such as government surpluses, land sale receipts etc. before being passed on to GIC for investing.

As SSGS is fully backed and guaranteed by the Singapore government, we can rest easy knowing that our monies in CPF are not dependent upon how well GIC’s investment returns are. Thus, even if GIC’s investment returns were negative, our money in CPF would still remain the same and continue earning the prevailing interest rate of the respective accounts.

This knowledge that our CPF monies would not suddenly decrease or go missing is extremely crucial when it comes to retirement planning. It provides both clarity and assurance in knowing how much we need to save up before our golden years. This is even more so when we factor in the SA’s higher interest rate.

I know that there are public worries that the government would not be able to fully guarantee our CPF monies. I think such worries are unwarranted given the financial standing that the government is in. Even if it really does happen in the future, I think we would have bigger issues at hand than just our CPF monies.

Building up your SA

Now that we know the importance of our SA with regards to our retirement, how do we build up our SA funds?

There are mainly two ways to do so, either through Ordinary Account (OA) transfers or cash contributions.

Both options can be done by simply signing in to your CPF account and going to My Requests>Building Up my CPF savings.

Thereafter, click on the option to either transfer from Ordinary Account to Special Account or contribute via cash.

With that, you can then input the amount to transfer or contribute to your SA. Note that the maximum amount of funds in your SA cannot exceed the prevailing Full Retirement Sum (FRS), which is $186k as of 2021. Hence, how much you can transfer or contribute is dependent upon the balance in your SA, before hitting the FRS limit.

Do also note that any transfer from your OA to SA is permanent and irreversible. As such, consider your own circumstances, especially your housing needs before committing to the transfer.

Retirement or house?

Before rushing to transfer or contribute funds to your SA, think about what your priorities are. I know it may seem contradictory for me to suggest this as I emphasized throughout this post to focus on retirement. However, I have my own personal biases due to the circumstances that I am in.

For instance, as I am currently single, I can only purchase a flat at 35 years old (I do not have the means to afford a condo). Since I still have a few more years before hitting that age, I am more inclined to use my CPF to plan for retirement.

For those who are married or intend to fund their retirement through their own cash investments, they might use their CPF solely for housing purposes. That is also entirely fine too.

The main thing here is knowing the drawbacks of each choice. By using your CPF for housing, the amount of available CPF funds for retirement would be lesser and vice versa, if you intend to maximise your CPF funds for retirement planning.

There is the option of going the middle road, but this also means you may require more effort for either option. This might result in having to use cash for your housing needs or take a longer time to hit the FRS.

Regardless of which choice you take, there are both pros and cons to it, you just have to balance it with your priorities.

Investing with CPF

Besides housing needs and retirement, your CPF can also be used for investing. However, I would not really recommend this unless you are very sure of what you are doing. Else, you might just fare worse than if you had left your CPF monies untouched.

When it comes to investing with your CPF, there are two main options either via the CPFIS or doing property investment.

Under the CPF investment scheme (CPFIS), You can invest with either your OA or SA. However, the types of products available would greatly differ. As a rule of thumb, I would not bother with investing your SA. You would be better off just earning the interest rate that CPF gives.

As we all know, our OA can be used to fund the purchase of residential properties. While most would use our OA for housing needs, nothing is preventing you from using yours for property investing instead. Nevertheless, I would only recommend this if you are a first-time buyer unless you do not mind paying the additional buyer stamp duty for a second residential property.

Now let’s look at both methods of CPF investing.

Investing using CPFIS

To invest via the CPFIS, you first need to create a CPF investment account with either of our three local banks (DBS, UOB and OCBC).

Once that is done, you can then use your CPF funds to purchase stocks or bonds listed on the local market via your respective brokerage platform (they need not be from the 3 local banks). Alternatively, you can also choose to invest with the CPF approved unit trusts, the list of products and options can be found here.

Do note that there is a limit to how much you can invest with your CPF. Currently, you can only invest with funds in excess of $20k for your OA. Additionally, only up to 35% and 10% of your investable savings in OA can be invested in stocks and gold respectively.

To know exactly how much you can invest with your CPF, you can log in to your CPF account and check under My Statement>Investment.

Alternatively, you can download the myCPF app and check under the My investment tab. Another good thing about the app is that you can also quickly see at a glance how much you have in all your CPF accounts, amid other useful functions too. Quite neat if you ask me.

Property investing using CPF

I will admit first hand I do not have much knowledge about this. However, I will still provide my own insight into it with whatever knowledge or information that I can find. As such, do let me know if some of this information or knowledge is wrong.

If you are thinking of using your OA for property investment, I would strongly advise you to look at private properties. This is mainly due to the minimum occupancy period (MOP).

For newly purchased BTO or resale HDB flats, there is a MOP of either 5 years or 3 years (only applicable for resale flats purchased without housing grants). This means that HDB flat owners can only rent out their apartments after the MOP is fulfilled. There is currently no MOP for newly purchase private residential properties. This allows private property owners to immediately reap rental benefits whenever appropriate.

Although there is no MOP for new private residential property owners, they have to contend with seller stamp duty (SSD).

SSD refers to the extra fee being charged to the property owner if they sold their private property within 3 years of purchase. This fee ranges from 12% to 4% of the selling price, depending on the duration that the property was held for. No SSD is charged if the sold property was owned for more than 3 years. The full rates for SSD can be found here.

If you only plan to use your private property for rental then the SSD would not affect you that much.

CPF accrued interest

Regardless whether you purchase a HDB or private property, you have to deal with the CPF accrued interest.

CPF accrued interest refers to the interest you would have gained if you had simply left your funds in OA untouched. Over a long period of time, your CPF accrued interest can potentially snowball to a significant amount due to the effects of compound interest.

Let’s use a simple example;

Supposed you used $50k for the down-payment of your property in 2021.

After 10 years, your CPF accrued interest would be around $14k.

If u were to sell the property now, you would have to return a total of $64k back to your CPF OA.

This is also applicable to any CPF monies you have used to pay for your mortgage loans. Thus, whatever you took out from your CPF, plus interest, would be deducted from your property selling price and returned back to your OA.

Should the total selling price be below what is to be returned to your CPF OA, you need not top-up the difference. It’s just that you would not be receiving any cash in hand for your property sale.

So really, please, plan properly before using your CPF OA for property investing.

Is it worth it?

Now that you know the intricacies of using your CPF to invest, the question is should you do it?

Personally, I feel that one should only consider investing their CPF if they are not investing their cash in hand. This is due to the fact that you do not want to overexpose yourself to market fluctuations.

Imagine experiencing a significant market correction if you had invested both your CPF and cash. There would be a huge hit on both your cash and CPF investment portfolio. While this would not significantly affect someone who is younger, what if you are approaching retirement soon?

Thus, I always treat my CPF as a secure contingency plan for my retirement, just in case s*** hits the fan for my cash investments.

Besides the risk of overexposing yourself to market risk, investing with CPF can also hamper your housing ambitions.

By using the OA for investing, we are reducing the amount available to be used for property down-payment or mortgage loan. This means that there might be a need to save up more cash for your housing needs. Depending on your financial circumstances, this might not be the easiest thing to do.

Hence, I feel that investing with your CPF is only worthwhile after fulfilling two conditions. Which are, securing your first property and carefully diversifying both the cash and CPF used for investments.

Using CPF as tax relief

On top of using your CPF for investing and building of retirement funds, it is also an avenue for tax relief.

I have highlighted the use of CPF for tax relief in my previous post on ways to reduce your income tax.

In short, you get tax relief for contributing to your own or your family member’s CPF accounts. This is subjected to a cap of $7k for each method.

As I have covered quite in-depth about using your CPF as tax relief in the previous post, I will not be highlighting it here again. So if you are interested head to that post to find out more:).


So there it is, these are some of the other ways in which your CPF accounts can be used to your advantage. These three methods are by no means exhaustive. Your CPF OA can also be used for other things such as education or contributing it to your parent’s retirement accounts. To get more information, you can always refer directly to the CPF website.

Regardless of how you wanna use your CPF accounts, always be mindful of the trade-offs and drawbacks. Only then can you make an informed decision about using your CPF monies.

Are there other ways in which you make use of your CPF accounts? Let me know in the comments below!

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