Attention CPF members aged 55 and above! Starting in 2025, your Special Account (SA) will be closed, impacting how your savings are used and potentially changing your investment options. Let's break down the change and its implications:
Before the changes
Upon turning 55, your SA funds are transferred to your Retirement Account (RA), up to the Full Retirement Sum (FRS).
Any shortfall was filled from your Ordinary Account (OA).
And the CPF-RA would then be paid out as part of CPF Life, which is basically an annuity that pays you a certain amount each month from 65 until you die.
Close the “loophole”
The new policy aims to close a loophole wherein some CPF members invested their CPF-SA savings before turning 55. Upon reaching 55, the invested CPF-SA funds became locked and cannot be used to fill up CPF-RA.
Instead the CPF-OA funds (yielding 2.5%) would be used to fill up CPF-RA. After this, investors would sell their CPF-SA investments, and all proceeds would return to the CPF-SA (with a yield of 4.08%).
This strategy allowed them to earn 4.08% interest and withdraw funds from CPF-SA at any time post-55, the same like a savings account with 4% interest and immediate liquidity.
New Policy
At last week’s budget speech, DPM Lawrene Wong announced that the CPF-SA account will now be closed for CPF members aged 55 and above.
This means after 55, any CPF contributions that would have gone into the CPF-SA will now go into the CPF-RA instead (up to the FRS)
And if you have invested your CPF-SA money, once you sell those investments, the proceeds will go into the CPF-RA (up to the FRS).
So now this “loophole” has been closed.
If you weren't using the "loophole" or plan to use it, this doesn't directly affect you.
If you were, you'll need alternative investment strategies. Consider: T-Bills, Singapore Government Bonds, Singapore Savings Bonds, stocks or Singaporean TOP favourites investment - Property.