CPF Hacks

(Version 2019. Updated as of: 2 Nov 2019)

Please drop a comment if you spot any errors or leave a feedback. I will attempt to consolidate key points and hacks from all sources in one place regarding your CPF.

You can contribute to your CPF accounts in 3 ways, by:

  • i) Voluntary Contributions (VC) to all 3 accounts (OA, SA, MA),
  • ii) RSTU to SA (< 55) or RA (>= 55),
  • iii) VC to MA

OA has the lowest interest rate of 2.5% but has the most flexibility in terms of usage (purchase of property, investment, education). OA transfer to SA or OA /SA transfer to RA is irreversible.

Uses MA for medical-related expenses instead of cash. Use the equivalent cash instead to top up the MA immediately after, to enjoy tax relief for VC to MA.

Prior to Age 55, you can transfer from OA to SA and do cash top-up to SA.

Upon reaching Age 55, you can no longer transfer from OA to SA OR do cash top-up to SA. The only way to increase SA is to do VC to all 3 accounts.

SA Shielding. Upon reaching Age 55, your RA is created with monies from your SA, then OA in that order of priority. As SA and RA have the same interest rate at 4%, it is better for your RA to be made up of monies mostly from your OA. Prior to reaching Age 55, use your SA to purchase low-risk investment instrument. You may liquidate it after your RA is formed at Age 55. Monies from the investment will flow back to the SA which continues to be a high interest bearing account of 4%.

The ceiling for SA is FRS, MA is prevailing BHS and RA is ERS. There is no ceiling for OA. FRS is 2X BRS, while ERS is 3X BRS.

Interest is calculated monthly and added at the end of the year to form the interest for the year. Interest is compounded annually.

VC at the start of the new year (in January instead of December), so that interest earned have a head-start to accumulate from January. Excess amount (after annual limit minus mandatory contribution) is returned at end of the year without interest earned.

VC / transfer near end of month for the following month as interest earned monthly is based on the lowest balance of the month.

RSTU to SA / RA by the end of year to enjoy CPF Cash Top Up Relief for the following year.

Your cohort’s BHS is fixed when you turn 65 years old. BRS, FRS and ERS amount is used at the point of Age 55 to determine how much you can withdraw from your accounts after setting aside for RA. BRS, FRS and ERS continue to rise and is fixed only when you turn 65 years old or when you start CPF LIFE payouts.

Power of compounding

All Singapore Citizen newborns born on or after 1 January 2015 qualify for the enhanced $4,000 MediSave Grant for Newborns. If left untouched till Age 55, this $4,000 becomes $34,585.47 with compounded interest (based on 4% i/r, assuming no extra i/r. Actual amount will be higher).

If a parent contributes $1,200 annually to his/her newborn’s SA from scratch, this $66,000 becomes $238,566.65 with compounded interest (based on 4% i/r, assuming no extra i/r. Actual amount will be higher) after 55 years.

If a parent contributes a one-time $100 to his/her newborn’s SA and forgets about it, this $100 becomes $864.64 with compounded interest (based on 4% i/r, assuming no extra i/r. Actual amount will be higher) after 55 years.

Returned accrued interest and principal for property purchase so that CPF will compound the money instead of doing it yourself.

Wait for market valuation to fall and use OA instead of SA to invest.

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