Last Updated on June 15, 2023 by Tree of Wealth

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The CPF Ordinary Account is part of Singapore’s national saving scheme and is one of three accounts available. You can use the account to increase your retirement savings, as well as to pay for housing, education, and insurance. The majority of your CPF contributions will be directed to the CPF OA account, with the percentage of contributions allocated to the account varying depending on your age. Once you reach 55 years old, the funds in your CPF OA account will be combined with those in your CPF Special Account to establish your CPF Retirement Account.

What is the rate of interest for the CPF Ordinary Account?

The CPF Ordinary Account offers tiered interest rates. The first $20,000 in the account will earn a higher interest rate of 3.5% per annum, while any balance above that amount will earn a lower rate of 2.5%. The interest earned on the account is credited to your CPF account annually. 

How can I utilize my Ordinary Account?

Payment for housing, education, and insurance can be made through your CPF OA, but it is important to take note of the compulsory minimum balances, which are stated below:

• While there is no minimum balance requirement for Housing and Insurance accounts in the CPF scheme, it is recommended that you keep a buffer of $20,000 in the account for unexpected expenses.

• The CPF Education Loan Scheme has an annual withdrawal limit, but if you are 55 years or older, you are required to maintain the Full Retirement Sum (FRS) in your CPF Retirement Account (RA).

For Housing Purposes

You can utilise your CPF Ordinary Account funds for various purposes under the CPF Housing Scheme, including purchasing an HDB flat, building or buying a private residential property, making down payments, taking out housing loans, or paying for stamp and legal fees.

For Education Purposes

You can use your CPF OA funds up to the Available Withdrawal Limit (AWL) under the CPF Education Loan Scheme. The AWL is calculated as the lesser of the two amounts:

• 40% of your total CPF OA savings, which includes your current OA balance and all previously withdrawn funds for education and investment purposes, or
• The remaining CPF OA balance after excluding any funds designated for housing or other schemes.

The amount of your CPF OA that you can use for education financing depends on whose education expenses you are paying. If you are funding your own, your spouse’s, your children’s, or your sibling’s education with your CPF OA, you can use the full AWL amount.

When using your CPF OA funds to finance the education of a family member, the maximum amount you can withdraw is determined by their level of education. Here are the specific limits:

• For university-level studies, you can mobilize up to 10% of your CPF OA.
• For polytechnic level or diploma studies (such as Technical Engineer Diploma or Technical Diploma in Culinary Arts at ITE), you can withdraw up to 25% of your CPF OA.
• For art college education, you can access up to 50% of your CPF OA.

For Insurance Protection Purposes

Only for HDB (Housing & Development Board) flats, the Home Protection Scheme (HPS) is an affordable and compulsory insurance policy offered by HDB that provides coverage for outstanding housing or mortgage loans in the event of total permanent disability, terminal illness, or death. It is one of the most competitively priced housing insurance options available.

To be eligible for the HPS, you must meet the following criteria:

1. Be between the ages of 21 and 65.
2. Own an HDB flat; private residential property owners must obtain private housing insurance.
3. Make housing payments through CPF savings or cash instalments. If you use CPF savings to pay for housing, HPS is mandatory.
4. Be in good health. You may be required to undergo a medical examination and provide the results. If you do not meet the health requirements, you can still use your CPF savings to pay for your monthly housing instalments.

The HPS covers you until you turn 65 or until your housing loans are fully paid off, whichever comes first. If you want to continue insuring your flat beyond age 65, you can purchase private housing insurance.

To determine the premium for the Home Protection Scheme (HPS), several factors are considered, including the loan amount, type of loan interest (market or concessionary rate), loan term in years, and the percentage of coverage required.

Your CPF OA funds will automatically cover your annual HPS premiums. If your account doesn’t have enough funds, you can authorize your co-owner, who must be a family member (such as your spouse, parent, child, or sibling), to use their CPF OA to pay the premiums.

An individual has the option to pay the entire premiums for the Home Protection Scheme using their CPF Ordinary Account. The deductions for HPS take precedence over the housing loan installment. In the event of insufficient funds, co-owners of the flat can be authorized to utilize their CPF OA savings to pay for the premiums.

Dependants’ Protection Scheme (DPS)

The Dependants’ Protection Scheme (DPS) allows you to utilize your CPF OA funds to cover insurance premiums. Great Eastern Life exclusively offers the DPS, which is a type of term life insurance that provides financial protection for you and your loved ones in the event of total permanent disability, terminal illness, or death. Enrollment is automatic, but you can choose to opt-out if you prefer.

What Happens When You Sell Your Property?

Refund of CPF upon Sale or Transfer of Property

If an individual decides to sell or transfer their property to another party, they are required to refund the principal amount withdrawn from their CPF OA for the property purchase along with the accrued interest.

If option monies, such as option fees and option exercise fees, were used, they must be refunded to the individual’s and their co-owner’s CPF account since they are part of the property’s selling price.

If the property is sold at market value, there is no need to top up any shortfall. This is as long as the selling price (including option monies) is enough to refund the amount used with accrued interest after fulfilling the outstanding loan.

The funds will be distributed to the individual and their co-owner based on the amount of CPF savings utilized by each party.

If you sell your share of a property, it must be sold at the prevailing market value. If the selling price is not enough to cover the repayment of your percentage of the loan and refund your CPF OA, the amount refunded will be the higher of the following two options:

1. The selling price of your partial share will be deducted by x% of the outstanding housing loan (where x% equals the share of the property you sold).
2. To determine your required CPF refund or the total mandatory CPF refund for you and your co-owner, you need to multiply the remaining sales proceeds by the ratio of your CPF refund amount to the total mandatory CPF refund amount.

The remaining sales proceeds refer to the selling price of the entire property minus the outstanding housing loan.

The amount to be refunded is limited to the total of the principal amount withdrawn from your CPF OA for the property purchase and the accrued interest. If you are 55 years of age or older and have pledged your property as part of your retirement sum, you will be required to repay the pledged amount, which will be used to fulfill your FRS in your CPF RA. Any excess funds will be returned to you in cash within one week after the refunds have been credited to your CPF account.

Making a Voluntary Housing Refund

If you have used your CPF OA for housing payments, you can choose to make a voluntary housing refund to your CPF OA even if you are not selling your property. This allows you to benefit from the interest earned on your CPF OA, leading to higher returns and more significant retirement savings. Moreover, the refunded amount can be used for other CPF-approved schemes like housing, education, insurance, and investments. By making repayments now, you can reduce the amount of refunds required when you sell your property in the future, resulting in potential profits. The maximum amount you can repay to your CPF is the principal amount withdrawn from your CPF OA for the property purchase plus the accrued interest.

Using your CPF OA funds to invest

By investing the funds in your CPF OA, you can potentially achieve higher returns than the risk-free rate of 2.5%. You can start investing your OA funds once you have set aside a minimum balance of $20,000. Through the CPF Investment Scheme (CPFIS), you have the opportunity to grow your retirement savings by investing your CPF OA and SA funds in various investment products, including:

• Endowment Plans From Insurers
• Retirement Plans From Insurers
• Investment- Linked Plans From Insurers
• Unit Trusts (UTs)
• Exchange-Traded Funds (ETFs)
• Fixed deposits
• Treasury Bills (T-bills)
• Singapore Government Bonds (SGBs)
• Fund Management Accounts
• Stocks (You can only use a maximum of 35% of your available investment capital)
• Property Funds (You can only use a maximum of 35% of your available investment capital)
• Corporate Bonds (You can only use a maximum of 35% of your available investment capital)
• Gold ETFs (You are limited to using a maximum of 10% of your available investment capital)
• Other products related to Gold include Gold certificates and savings accounts, as well as Physical Gold. (You are limited to using a maximum of 10% of your available investment capital)

To determine your investible savings, you need to combine your CPF OA balance with the amount you have withdrawn from your CPF for investment and education. If you’re interested in starting your CPFIS-OA investment journey, you can do so by opening a CPF Investment Account with a CPFIS agent bank. The following banks are CPFIS agents:

• DBS Bank Ltd (DBS)
• Overseas-Chinese Banking Corporation Ltd (OCBC)
• United Overseas Bank Ltd (UOB)

Is it possible for me to make a withdrawal from my CPF OA account?

Direct withdrawal of funds from your CPF OA is not permitted. However, once you turn 55, you can withdraw funds from your CPF RA, which comprises the savings from your CPF OA and SA.

Is it possible for me to make a top-up to my CPF OA account?

You cannot top up your CPF OA exclusively, but you can make deposits to your CPF account, which will be allocated among your three accounts: CPF OA, SA, and Medisave, in accordance with the allocation rates for mandatory CPF contributions. The top-up limit is determined by subtracting the mandatory CPF contributions made during the calendar year from the CPF Annual Limit of $37,740.

How does the CPF OA differ from the CPF SA (Special Account)?

The CPF OA is designed to allocate funds for fulfilling financial obligations such as housing, education, insurance, and investment. In contrast, the CPF SA is focused on accumulating savings specifically for retirement. The funds in the CPF SA can be utilized for various retirement-related financial and investment products. If you want to learn more about the CPF SA, you can refer to our comprehensive guide here!

To sum up, the CPF OA is a valuable tool for growing retirement savings through interest and investments via the CPFIS. It can also be used to offset housing, education, and insurance expenses.

If you want to learn more about how to optimize your CPF OA funds to meet your individual needs, don’t hesitate to speak with our accredited financial advisors.

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