We have written extensively about the merits of topping up your own CPF accounts. The attractive, risk-free interest that CPF pays makes it an effective way to compound your interest returns over an extended period of time.
Beyond mandatory CPF contributions from your monthly salary, you can also top up your CPF accounts in cash. This not only increases the savings in your respective CPF accounts, but also gives you income tax reliefs of up to $8,000 for top-ups to your own CPF accounts and another $8,000 for top-ups to your loved ones CPF accounts.
We look at two main ways you can top up your CPF accounts in cash. You can make 1) voluntary CPF MediSave top-ups and/or 2) top up your CPF Special Account (or Retirement Account if you are 55 or above) via the Retirement Sum Topping Up (RSTU) Scheme.
But what are the differences between these two schemes? More importantly, what are the implications of choosing one option over the other?
Read Also: 5 Reasons Why You Should Top-Up Your CPF Special Account During This Year-End
Before we delve deeper into the discussion, let’s first understand some of the restrictions and limitations of topping up your CPF accounts.
With effect from 1 January 2022, voluntary contributions made for CPF MediSave top-ups will no longer be subject to the Contribution Limit. Instead, CPF members can make voluntary contributions up to the Basic Healthcare Sum (BHS) of $75,500 in 2025. Additionally, the tax relief for both MediSave and Retirement Sum Topping Up Scheme top-ups is a shared cap at $8,000, and another $8,000 tax relief for top-ups to loved ones.
What this means is that if you only want to contribute to your MediSave Account (MA), but you already have $70,000 in the account, then you will only be able to top up a maximum of $5,500 and earn a tax relief on it.
In another scenario, if you have already made an RSTU top-up of $7,000, you would then only be able to enjoy a tax relief of $1,000, instead of the full $5,500. Conversely, if you topped up your MediSave Account by $5,500 (up to the BHS in 2025), you would only be able to enjoy a tax relief of $2,500 for your RSTU top-up, even if you top up more.
Do note all tax relief is subject to your personal tax relief cap of $80,000.
Read Also: What’s The Maximum Amount You Can Contribute To Your CPF Accounts Each Year?
Voluntary Contribution For MediSave top-ups Or Retirement Sum Topping Up Scheme?
Let’s use an example of Alex, a Singaporean who is currently 35, who wants to make a CPF top-up of $8,000 to earn tax relief. For the sake of simplicity in this article, we will assume he only considers a voluntary contribution to his Medisave top-up.
Alternatively, Alex can also choose to make a Retirement Sum Top-up to his own CPF Special Account and earn tax relief of up to $8,000.
As the tax relief for both MediSave and RSTU top-ups share a cap of $8,000 and another $8,000 tax relief for top-ups to loved ones, it really boils down to which top-up is more suitable for your purposes.
Which should he/you choose? Here are some notable factors which are worth considering.
Read Also: CPF Top-Ups VS SRS Top-Ups: Which Should You Choose?
MediSave Account Can Be Used For Medical Treatment & Health Insurance While Special Account Can Be Used Only For Retirement
The first thing to note is that while you are still young (i.e. below 55), your MediSave Account will be more “useful”.
That’s because your MediSave Account can be used to pay for hospitalisation, pregnancy-related costs and some of your health insurance premiums such as MediShield Life, ElderShield/CareShield Life and any private integrated shield plan which you may purchase.
In addition, you can also use your MediSave Account to pay for hospital treatments and insurance premiums for your spouse, children and parents.
In contrast, your CPF Special Account has limited usage when you are still below the age of 55. This is because it’s meant for your future retirement. The only thing you could do right now is to invest the funds for a higher return via the CPF Investment Scheme – Special Account (CPFIS-SA).
When Your MediSave Is Full, Further Contributions Will Spill Over To Your Special Account.
Both the CPF Special Account and MediSave Account are comparable because they both earn you the same interest rate – which is the floor rate of 4.0% per annum today. When interest rates rise (or fall), both accounts will be similarly affected as they share the same formula used to calculate their interest rates.
However, consider what happens if your MediSave Account has reached the contribution ceiling (i.e. the Basic Healthcare Sum (BHS)).
Basic Healthcare Sum: Our MediSave Account cannot have an amount that is more than the Basic Healthcare Sum (BHS) – currently at $75,500 as of 2025.
If we have already achieved the current BHS, any contributions made to our MediSave Account (including mandatory contributions from our monthly salary) will automatically flow to our CPF Special Account.
This means that it will continue to earn us a minimum interest of 4.0% per annum, similar to the contribution to our MediSave Account. This makes it a lot easier for us to achieve the Full Retirement Sum (FRS) in our CPF Special Account once our MediSave Account has reached the BHS.
Why Should You Top-Up Your Special Account Over Your MediSave Account?
The Retirement Sum Topping-Up Scheme is a separate scheme from the CPF Annual Contribution Limit. This scheme is meant for CPF members to build up their retirement savings. Cash top-ups will go to your Special Account or your Retirement Account (for those 55 and above)
Your Special Account Will Ultimately Be Used For CPF LIFE
The biggest reason for topping up your CPF Special Account is that the funds are meant to support you in the future – in your retirement.
When you top up your MediSave Account, you are basically saying that you want the funds to help you cover the healthcare expenses for you and your loved ones – which can be used both today and in the future. When you top up your Special Account instead, the funds will be used to fund your future retirement – when you reach the Payout Eligibility Age of 65.
At age 55, funds from your CPF Special Account and Ordinary Account will be set aside in your Retirement Account. You can choose between the Basic Retirement Sum (BRS), Full Retirement Sum (FRS) and Enhanced Retirement Sum (ERS). You also have the option of withdrawing any unused amount from your OA and your SA, which have not been set aside in your Retirement Account.
Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55
Besides Paying For Healthcare Related Expenses, You Have No Real Way Of Withdrawing Your MediSave Account Savings
Since MediSave savings are meant for your hospitalisation and medical expenses, there is no real way you can withdraw funds from your Medisave Account, unless you fall ill – which is not what you would want either.
If you have the good fortune of living till old age without needing to be hospitalised, you might find yourself with a sizeable sum of money in your MediSave Account – without being able to use it, besides paying for your own MediShield Life, ElderShield or CareShield Life premiums, and those of your loved ones.
Of course, the positive way of seeing this is to count your blessings, knowing that the only reason why you have MediSave savings that you can’t use is that you do not have hospitalisation expenses or medical treatments to pay for. That, by itself, should be considered a win.
However, you could also be forgiven for thinking that in hindsight, you should have topped up your Special Account/Retirement Account instead, since that would give you more funds that you can use during your retirement.
Nevertheless, if you have a sizeable amount, you can choose to pay for the medical treatments of loved ones too. And, even if you do not end up using the MediSave Account balances before you pass on, your MA savings will be given to your beneficiaries.
Similar to most personal financial decisions that we make, there are usually two sides to any decision.
When it comes to topping up your MediSave Account or your Special Account, there is no right or wrong answer. Nobody, except for you, can say whether it’s better to save up for your future medical expenses or your retirement.
The best thing we can do for ourselves is to do our best to understand how the various schemes work and to make a decision based on what we are most comfortable with.
