This article was originally published on 25 February 2019 and updated to reflect new information.
In Singapore, the Central Provident Fund (CPF) revolves closely around all our lives. From the day we’re born, our CPF accounts – Ordinary Account, Special Account and MediSave Account – are created.
As we grow up and start working, we will contribute a significant chunk of our monthly salary to these accounts. These funds can be used to pay for our home, our medical needs and secure our retirement.
As our CPF accounts are central to our everyday lives in Singapore, here are four calculators that can help us better understand how we can use it.
When we start working, majority of our CPF contributions will go towards our Ordinary Account (OA), with a smaller proportion going to our Special Account (SA) and MediSave Account (MA).
If we’re wondering how much is going into the respective accounts and how much is contributed from our employer VS from ourselves, the CPF Contribution Calculator works this out for us.
Do note that the inputs we used is for an employee under 35 years old, earning the median income in Singapore.
After working for a while, we will realise that our Ordinary Account balances far exceeds our Special Account balances. Of course, this is because majority of our CPF contributions go into our CPF OA, rather than SA or even MA.
We retain the most flexibility with our OA savings, being able to pay for the downpayment and monthly instalments on our home as well as being able to make investments. This greater flexibility is also why our OA balances earn an interest return of 2.5% per annum, while our SA balances earn an interest return of 4.0% per annum.
This means that by simply transferring our OA balances to our SA, we stand to earn an additional interest of 1.5% per annum on our funds. That’s where we can use the Ordinary Account- Special Account Savings Transfer Calculator to estimate the additional earnings we can earn. The point of making this transfer is to grow our retirement nest egg, to be able to receive larger monthly payouts under the CPF LIFE scheme when we turn 65.
Using this calculator, we can calculate that transferring $10,000 from our Ordinary Account to our Special Account will give us an estimated $9,135 more in over a 25-year period.
# 3 Our First Home Calculator
This calculator estimates the maximum price of the property we can purchase and housing loan we can take, based on our income and, therefore, ability to service the loan.
Based on a couple earning the median income, and with prior CPF contributions amounting to $40,000 each, they would have a net monthly salary of close to $6,000.
We also need to input our monthly expenses, either via a lump sum, or a detailed breakdown that the calculator provides. Based on a couple who incurs $2,500 in monthly expenses and sets aside $2,000 for savings and investments needs, they will be able to purchase a property of up to $523,500.
You can input your own numbers to estimate the value of the property you can afford to buy and pay for with your monthly instalments.
You can also check out the CPF Withdrawals Limits Calculator to understand how much CPF funds you can use to pay for your home as well as the Total Interest Calculator to estimate the total interest you will eventually pay on your home loan.
CPF Lifelong Income For the Elderly (LIFE) is our national annuity scheme. It provides us with a lifelong monthly payout starting from 65.
The CPF LIFE scheme itself is quite a complicated tool, requiring us to choose the retirement sum we wish to set aside – Basic Retirement Sum (BRA), Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS) – as well as the plan we wish to be on – Basic Plan, Standard Plan or Escalating Plan. In addition, we can also choose to start our CPF LIFE payouts at any point between our payout eligibility age (PEA) of 65 and to a maximum of 70.
The CPF LIFE estimator allows us to do two things:
- estimate our CPF LIFE monthly payouts and bequests, on the different CPF LIFE retirement sums, CPF LIFE plans and starting age
- estimate how much we need to our Retirement Account (RA) in order to receive our desired CPF LIFE monthly payouts
Using this calculator, you can input your estimated Retirement Account (accounting for whether you contribute the BRS, FRS or ERS) balances at 55 to calculate how much you can receive on the Basic Plan, Standard Plan and Escalating Plan, as well as view your payouts, cumulative payouts and bequests left behind over time.
One drawback of this calculator is that only those who do not have a CPF LIFE policy and are born on or before 1981 may use this tool to.
In Singapore, CPF Is An Integral Part Of Our Lives
Like it or hate it, the CPF is part of our lives in Singapore. Rather than fight it, we should try to understand how the scheme works and how we can leverage on it, as far as we think, to enrich our lives.
CPF provides numerous other calculators on its page that we can use to figure out the best ways to utilise our CPF funds for our retirement, housing, healthcare, investment, education, insurance and other needs.
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