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CPF for dummies

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This article was not reviewed by Monetary Authority of Singapore (MAS) or any other relevant authorities.

If you are working, you would know that a portion of your income goes to this account called Central Provident Fund (CPF); but what other basic knowledge should I know about CPF?

What is CPF?

CPF is a compulsory social security saving scheme where employees contribute a portion of their income into it every month. Employers also contribute into their employees’ CPF.

Who has CPF?

Every Singaporean and Singapore Permanent Resident (SPR).

Who needs to contribute?

Source: Seedly

How many accounts do I have in my CPF, what are its uses and interest rates?

AccountsUsesInterest Rates* (as of 2021)
Ordinary Account (OA)Housing, insurance, investments and educationUp to 3.5 p.a.
Special Account (SA)Retirement and investments in retirement-related financial productsUp to 5% p.a.
MediSave Account (MA)Hospitalisation expenses and medical insuranceUp to 5% p.a.
Retirement Account (RA)At age 55, RA will automatically be created in which your OA and SA will be combined to form your retirement fund 

* The above interest rates include 1% p.a. extra interest on the first $60,000 of combined CPF balances (OA + SA + MA), with up to $20,000 from the OA. From January 2016, those aged 55 and above also earn 1% p.a. additional extra interest on the first $30,000 of combined balances (OA + SA + MA), with up to $20,000 from the OA, thus earning up to 6% p.a. on their retirement balances.

What happens when I am 55 years old and 65 years old?

Your Retirement Account (RA) will automatically be created at age 55 in which your savings in your OA and SA will be combined to form your retirement fund in your RA.

Thereafter, you can withdraw money from your RA depending on several criteria.

Source: CPF

At age 65, you would receive monthly payouts from your RA to fund your retirement.

Basic retirement sum and monthly payouts for 2021

Taking in consideration inflation rates, basic retirement sum and monthly payouts will increase annually.

For Singaporeans or SPR turning 55 years old in 2021, the basic retirement sum would be $93,000 and the monthly pay out for life from 65 years old would be $770 to $830.



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