The Central Provident Fund (CPF) is a comprehensive social security system designed to meet the retirement, healthcare, and housing needs of Singaporeans and Permanent Residents (PRs). Established in 1955, CPF is a mandatory savings plan to ensure financial security during retirement and beyond.
This guide covers every aspect of CPF, from its structure to its various applications.
1. Overview of CPF
CPF is managed by the Central Provident Fund Board under the Ministry of Manpower. Contributions to CPF are made by both employees and employers, with varying contribution rates depending on age, income, and residency status.
Key Functions of CPF:
- Retirement Savings: Ensures financial independence post-retirement.
- Healthcare: Provides funds for medical expenses and insurance.
- Home Ownership: Assists in the purchase of property and mortgage payments.
- Education: Offers options to pay for children’s tertiary education.
2. CPF Accounts
CPF operates through four main accounts, each serving a distinct purpose:
2.1. Ordinary Account (OA):
- For housing, education, and approved investments.
- Accrues an interest rate of up to 3.5% (inclusive of an extra 1% for the first S$20,000).
2.2. Special Account (SA):
- Dedicated to retirement savings and investment in retirement-related financial products.
- Accrues a higher interest rate of up to 5% (inclusive of an extra 1% for the first S$40,000).
2.3. MediSave Account (MA):
- For medical expenses and premium payments for health insurance such as MediShield Life.
- Earns up to 5% interest.
2.4. Retirement Account (RA):
- Created when a member turns 55 by transferring savings from the OA and SA.
- Funds here are used to provide monthly payouts through CPF LIFE during retirement.
3. CPF Contribution Rates
Contribution rates vary based on age and income level.
3.1. For Employees Aged 55 and Below:
| Monthly Wage (S$) | Employee Rate | Employer Rate | Total Contribution (%) |
|---|---|---|---|
| >750 | 20% | 17% | 37% |
3.2. Reduced Contributions for Older Workers:
As members age, contribution rates decrease to focus on immediate needs like healthcare.
4. Key CPF Schemes
CPF extends beyond savings and retirement, with multiple schemes:
4.1. Housing:
- CPF Housing Grants: Assists in purchasing HDB flats or private properties.
- Using OA Savings: For down payments and mortgage installments.
4.2. Healthcare:
- MediShield Life: National healthcare insurance covering large hospital bills.
- Integrated Shield Plans: Additional private insurance coverage.
4.3. Retirement:
- CPF LIFE (Lifelong Income for the Elderly): Ensures monthly payouts for life.
- Retirement Sum: The amount required in the RA to join CPF LIFE. It is categorized as:
- Basic Retirement Sum (BRS)
- Full Retirement Sum (FRS)
- Enhanced Retirement Sum (ERS)
4.4. Education:
- OA funds can be used to pay for children’s education at approved institutions.
5. Interest Rates and CPF Contributions
CPF accounts earn competitive interest rates, with extra interest (1%–2%) for the first S$60,000 of combined CPF balances.
5.1. Interest Tiers (Effective 2024):
- First S$30,000: +2% additional interest.
- Next S$30,000: +1% additional interest.
6. CPF Withdrawals
6.1. Eligibility for Withdrawals:
- At 55 years old, members can withdraw funds above the Retirement Sum.
- Special withdrawals for specific purposes such as medical bills.
6.2. Lump Sum Withdrawals:
Members may withdraw up to 20% of their RA balance upon turning 65.
7. CPF Nomination
CPF savings do not form part of the member’s estate. Members can make a CPF nomination to specify beneficiaries.
8. How to Check and Manage CPF Balances
- Log in to myCPF Online Services using Singpass.
- Use the CPF Mobile App for on-the-go updates.
- View contribution history, balances, and withdrawal eligibility.
FAQs
Q1. Who needs to contribute to CPF?
CPF contributions are mandatory for Singaporean Citizens and Permanent Residents employed in Singapore.
Q2. Can foreigners contribute to CPF?
Foreign workers on Employment Passes and S Passes are exempt from CPF contributions.
Q3. Can I invest my CPF savings?
Yes, under the CPF Investment Scheme (CPFIS), OA and SA savings can be used to invest in approved financial products like stocks, unit trusts, and insurance policies.
Q4. What happens if I have insufficient CPF for my retirement?
The government offers support schemes like Silver Support Scheme for retirees with low CPF savings.
Q5. Can I use CPF to buy a second property?
Yes, but additional conditions and limitations apply, especially concerning the Retirement Sum requirement.
Q6. Is CPF savings subject to income tax?
CPF contributions are tax-exempt, but withdrawals beyond the required sums may be taxable in specific scenarios.
Q7. What happens to my CPF savings upon death?
Savings are disbursed to beneficiaries according to the CPF nomination or Singapore’s intestacy laws if no nomination is made.
9. Planning for the Future with CPF
Steps to Maximize CPF:
- Voluntary Contributions: Top-up accounts to enjoy tax relief and higher interest.
- Cash Top-ups for Family: Boost loved ones’ CPF balances.
- Optimize Investments: Explore CPFIS for potentially higher returns.
Considerations for Future CPF Policies:
CPF policies evolve to meet the changing needs of Singaporeans. Regular reviews ensure the system remains robust, flexible, and sustainable.
10. CPF Updates and Resources
Stay informed about CPF changes:
- CPF Board Website: www.cpf.gov.sg
- CPF Service Centres: Visit for personalized assistance.
- Government Budget Announcements: Watch for annual updates.
This guide offers a detailed overview of CPF’s workings. If you have further questions or require clarification, feel free to ask!