Central Provident Fund (CPF) is a government scheme that aims to enable Singaporeans’ retirement adequacy. For those of us below 55-years old, there are 3 different accounts with varying interest rates. They are Ordinary Account (OA), Special Account (SA) and Medisave Account (MA). The rates are 2.5% per annum (p.a) for OA and 4% p.a for the other accounts.
To enhance retirement savings for Singaporeans, CPF gives an additional 1% p.a on all accounts for the first $60,000, with a cap of $20,000 for OA. Thus to enjoy the 5% p.a interest rate earlier, we can transfer the excess funds from OA to SA, up to $40,000 (including our MediSave balance).
While OA has a lower interest rate of 2.5%, we can use it to service our home mortgage payments, education loans, and selected insurance payments, on top of saving for retirement. If we do not have any plans to use our OA funds in the long term, we can either use OA for investing or transfer them to SA to enjoy higher risk-free interest rates.
Before proceeding on with the guide on transfer from OA to SA, it is important to note that the process is irreversible. For better estimation, CPF board also has a calculator for us to estimate the interest difference when we use ordinary account to special account.
Now, here is a step-by-step guide on how to transfer our funds from OA to SA in three easy steps.
#1 Enter The CPF Home Portal And Login Via SingPass
Before starting, do get your SingPass access ready as it would require SingPass login. The transfer process can be done online, via this portal.
On the CPF board portal for transferring OA savings to SA, CPF will once again advise that the process is irreversible. Do click on “Next” button to proceed with the transfer.
We will be re-directed to the request page for OA to SA transfer. A brief note on the process is explained. Do tick on the terms and conditions box to start the transfer request. This will lead us to our SingPass login, to verify our identification before we can proceed to Step 2.
#2 Check CPF OA Balance & Key In The Amount You Wish To Transfer To SA
Upon SingPass login and confirming the transfer request, we will be able to access the transfer form.
Here, we will be able to double-check our OA total amount and CPF will automatically advise how much you would be able to transfer to SA. The maximum amount you can transfer from OA to SA is the difference between the current Full Retirement Sum of $186,000 and the sum of our current SA funds and the net SA withdrawn under the CPF Investment Scheme (CPFIS-SA) for investments that have not been completely disposed of.
From there, key in the amount you are comfortable transferring over to SA. As long as it is within the approved amount, the transfer will be approved.
If your closed ones have been advising you on the CPF transfer, you can share their full name according to the National Registration Identity Card (NRIC) so that the CPF board can show their appreciation.
#3 Confirm The Amount You Wish To Transfer And Process It
Here, we can double-check the amount we are transferring and proceed to submit the transfer request.
Upon confirmation, the funds from OA will be immediately transferred over to SA and it will start accumulating the 4% p.a. interest (or 5% p.a.) from the date of transfer.
While contributing 17% of our monthly salary is a substantial amount, we can still make the most of it by figuring out the optimal CPF strategy for ourselves. One way is to transfer funds that we do not intend to use for housing from OA to SA to enjoy a higher risk-free interest rate of 4% p.a (or 5% p.a. if it is part of the first $60,000).
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