CPF
September 13, 2023
CPF Corner
CPF stands for Central Provident Fund and comprises of 3 accounts of the Ordinary Account (OA), Special Account (SA) and MediSave Account (MA). Upon reaching 55 years old, the Retirement Account (RA) will be created.
It is created for Singaporeans and Permanent Residents (PR) to take care of basic needs of housing, healthcare, coverage, protection, growing of wealth as well as retirement.
Here in this section it is our educating effort to help understand on CPF’s many functions, grants & schemes, hacks, how you can use it for different purposes for life’s milestones and commitments as well as maximising your CPF.
The 3 Pillars of CPF
Over the years since its first inception, the CPF has went through many iterations and versions to be what it is today. But Housing, Healthcare and Retirement. These 3 Retirement needs form the basis of CPF’s purpose.
Protection, Coverage & Healthcare
The MediSave Account sets aside your income for healthcare treatment purposes and you can use it for outpatient treatments and hospitalization usage to a certain extend. You can also use it to supplement premium payments including the MediShield Life, as well as the Integrated Shield Plan from private insurers. It can also be used to pay premiums for approved healthcare and long-term disability coverage plans.
Owning a home using CPF
Using CPF to pay for mortgage helps to even out the finances and assures Singaporeans to have a roof over their heads. This also allows Singaporeans to live rent free. The amount in CPF also makes up to our retirement payouts upon retirement age. Do note that the amount used for housing needs will definitely affect the retirement pay outs upon the payout age.
Retirement Income - CPF Life
The CPF Lifelong Income For the Elderly (CPF LIFE), is a whole life annuity scheme that is designed to payout for life, regardless of age. The purpose is to address the concern of longevity expenses as it is uncertain how long we will live, with the advancement on medical sciences and technology that are able to provide for better treatment and prolonging of lives.
What Does CPF Consist Of?
Your CPF consists of 4 accounts:
Ordinary Account (OA) – Used mostly for housing payment, insurance premiums like the Dependent Protection Scheme (DPS) and investing in Unit Trusts as well as other various instruments like ILPs, ETFs, Singapore Government Bonds and even physical gold.
Read our Ultimate Guide on the CPF OA!
Special Account (SA) – Set aside for golden years and retirement planning. Can be used to invest as well as retirement related schemes and financial plans.
Read our Ultimate Guide on the CPF SA!
MediSave Account (MA) – Can use used to pay for hospital bills (up to an extent), pay premiums for hospitalization plan upgrades and long-term disability plan, including the supplementary plans available.
Retirement Account (RA) – The OA and SA is combined to form the Retirement Account (RA) when one turns 55. The RA is used to meet basic needs during old age. With the Retirement Account, an annuity scheme called the CPF LIFE will also be available to payout monthly, depending on the amount the Retirement Account has, there are 3 main tiers of payouts.
As we continue to work, we also contribute to CPF into the 3 main accounts of OA, SA, MA and at age 55, the RA.
For Self Employed, do consider to contribute to your CPF as well.
Retirement Planning
From CPF Life to the various retirement schemes, this section explains the different monthly payout plans, support and how you can withdraw in your golden years.
Buying a House
Home ownership marks a big milestone in your life! Here we cover from buying a house, what you should consider, refunds of withdrawn CPF funds, mortgage loans to HPS.
Growing Your Wealth
Discover how CPF's attractive interest rates help in accumulating and compound your savings and wealth for retirement, which can be done via regular or ad-hoc top-ups and contributions.
Healthcare With CPF
From Hospitalisation, Outpatient treatment, Maternity packages to upgrading of integrated hospital plan, be educated on how CPF covers you from healthcare to disability care.
CPF Tips, Hacks & Guides
Ever thought of how to make a nomination or closing a CPF account? Getting around on how to utilise the CPF can be confusing. Learn all the CPF tips & hacks in this section as well as managing the CPF account, statements, online services!
Grants, Tax & Schemes
Do you know the MediSave account is created for newborns when born? Aside from preparing for retirement and healthcare purposes, CPF can be used for education loan & more. Here we talk about the other CPF grants and schemes available.
Why Should I Contribute to CPF?
The CPF savings earn a minimum interest of 2.5% for OA and 4% for other accounts. In addition, the first $60,000 in the combined CPF balances, with up to $20,000 from the Ordinary Account, will earn an extra 1% interest.
Aside from the interest rate, you should consider contributing to CPF if you are a high income earner as well as preparing for retirement in your golden years.
Find Out How Insurance Plans Complements CPF
The various plans offered by Insurers in the market are designed to complement the CPF, not to rival & replace it.
The different Term Coverage, Whole life Insurance plans, Stand-alone Critical Illness protection plans, endowment plans including savings and retirement plans as well as Investment Linked Policies are good plans on their own and CPF plans definitely makes a good match with them.
We have specially curated the best plans and compare them for you so you don't have to do so.
Should you have any concerns on the CPF plans available or would like to find out how to best maximise your CPF accounts, simply fill in the form to find the coverage best solution catered to your needs. Our experienced licensed FA advisor will get in touch with you shortly upon your request.
No obligations. No hidden fees and costs. Just professional advice.
Popular CPF FAQs
To find out more, read our Ultimate Guide on CPF Ordinary Account (OA)
To find out more, read our Ultimate Guide on CPF Special Account (SA)
The contribution rates ranges from 12.5% to 37% of your monthly wages. This range of rates will change according to your age.
Employee’s age | Contribution rates from 1 January 2022 (for monthly wages > $750) | ||
By employer (% of wage) | By employee (% of wage) | Total (% of wage) | |
55 and below | 17 | 20 | 37 |
Above 55 to 60 | 14 | 14 | 28 |
Above 60 to 65 | 10 | 8.5 | 18.5 |
Above 65 to 70 | 8 | 6 | 14 |
Above 70 | 7.5 | 5 | 12.5 |
source: CPF
At 55 years old, a fourth account called the Retirement Account (RA) will be created and used to set aside the Retirement Sum. CPF Board will then transfer all your savings from your SA into your RA once you reach 55 years old by default. The amount transferred is up to the Full Retirement Sum (FRS) of your cohort. If there isn’t enough in your SA, the remaining balance will be taken from your OA.
CPF shielding happens when you “shield” your SA savings from being transferred to your RA. Instead, you use your OA savings, which allows more of your CPF money to earn 4% rather than 2.5% interest.
CPF Shielding is done via the CPF Investment Scheme (CPFIS), which allows you to invest both your OA and SA savings. Only the first $20,000 in your OA and the first $40,000 in your SA cannot be invested/shielded. To find out more on how to exactly “shield” your CPF, read more here: Full Guide to The CPF Shielding Hack – All You Need To Know
CPF LIFE (Lifelong Income For the Elderly) is an annuity programme set up by the Singaporean government which provides you with regular payouts every month from age 65 onwards, for the rest of your life.
Read more here: What Is CPF LIFE And How Does It Work?
The Retirement Sum Scheme was created to provide CPF members with a monthly income to support a basic standard of living in their years of retirement.
The CPF LIFE Scheme was then introduced in 2009 to mitigate longevity risks, and provides Singaporeans with a monthly payout for as long as they live. Citizens are placed on CPF Life if they are a Singaporean or Permanent Resident born in 1958 or after.
Read more here: All You Need To Know About The CPF Retirement Sum Scheme
CareShield Life is an improved disability insurance plan that is compulsory for all Singaporean residents 30 years and above. It will be launched in 1 October 2020.
How it works is that in the event of severe disability, CareShield Life provides monthly cash payouts for the rest of your life. CareShield Life premiums are affordable. No one will lose coverage due to inability to pay.
CareShield Life is an improved version of the previous ElderShield plan. To know more about the difference between CareShield and ElderShield, read more here: Careshield Life 2022: All You Must Know About Singapore’s New Disability Insurance Plan
Differences between CareShield Life & ElderShield
| ElderShield | CareShield Life | |
| Monthly Cash Payouts | $300 or $400 | From $600 |
| Payout Duration | 5 or 6 years | For life |
| Premiums | Fixed | Increases with time until age 67 or when a claim is made. |
| Annual premiums | Under ElderShield 400 $174.96 per year (Male) | Depends on entry age (see MOH premium calculator) |
| Premium term | Age 40 to 65 | Age 30 to 67 |
| Administration | Private Insurers | Government |
| Enrollment | Automatically enrolled (but you can opt out) | Optional for those born in 1979 or earlier. Compulsory for those born in 1980 or later. |
| Cover pre-existing conditions | Maybe | Yes, for those born in 1980 or later |
| Subsidies and Incentives | No | Yes |
No, it does not pay out for critical illnesses of all stages. However, upon diagnosis of critical illnesses of all stages and hospitalisation is required, it will be covered. And according to the type of Integrated Shield Plan and the cash rider you have, the different class of ward as well as the coverage of co- insurance and deductibles differ.
However payouts for CI (Critical Illness) is not covered for under MediShield Life.
To find out more: 7 Things CPF MediSave, MediShield Cover But May Not Be Enough
Related Articles
CPF
February 22, 2023
