Closure of CPF’s SA for age over 55 – Implications for retirement planning

The discontinuation of the Special Account( SA) for individuals aged 55 and above, is set to take effect next year.

Historically, CPF members employed a “shielding” strategy to maximize their savings’ interest income. By transferring funds to their SA, members benefited from a higher annual interest rate of 4.08%, compared to the Ordinary Account's (OA) 2.5%.

However, the upcoming changes will render this strategy ineffective for those above 55, as their ability to keep funds in the higher interest-earning SA will be eliminated.

However, it may be good to understand the likely possible implications of the change.

The cessation of the SA for individuals over 55 could inadvertently result in some CPF members, accruing interest at the OA’s lower rate of 2.5%, if they do not opt to transfer their OA funds to their RA after the SA closure.

Firstly, we may need to note that most members may have met their BRS through their RA, leaving little to no balance in their SA.

This scenario primarily affects those whose retirement planning strategies did not involve actively managing the transfers between their accounts to optimize interest earnings.

It can be well expected that some senior CPF members passively manage their CPF accounts. Consequently, the shift of SA funds to the OA could result in lower interest income for a portion of CPF members, should they decide against transferring their OA funds to their RA following the SA’s closure.

As for those who manage their CPF account, such as those who practice the “shielding” strategy and have met the BRS, they may in a sense, be denied of a long-term, high-interest, low-risk investment option and may opt to withdraw the sum to be invested elsewhere (instead of 2.5% in OA), to avoid transferring their money to the RA.

It is not “the same” to say that after your SA is closed and transferred to your OA you can always transfer it to your RA, to still get the higher 4.08% interest of your closed SA. Because under the SA, you can withdraw all your funds at any time, if you have met your BRS.

In contrast, under the RA, funds can only be withdrawn as a monthly annuity through CPF Life or the old CPF Minimum Sum Scheme.

One should note the "withdrawal anytime after age 65, for those born after 1 Jan 1958" - Additional 20% of your retirement savings, less the $5,000 withdrawable from 55" - "Based on your Retirement Account balance at age 65 and any CPF Life premium balances at 65. Any amount not withdrawn or used to increase your monthly payouts will be transferred to your OA for your future withdrawals in the same month you start your monthly payouts" - "excluding any cash top-ups or CPF transfers as well as government grants such as CPF LIFE Bonus or Deferment Bonus as they are designed to boost your retirement payouts".

Additionally, if you select the CPF Life Standard Default Plan, all accumulated interest from age 65 will be absorbed into the CPF Life pool upon death.

Consequently, most CPF members who wish to leave their accumulated interest to their nominees might opt for the Basic plan, which offers a lower monthly payout, instead of the default Standard plan.

For instance, the accumulated interest lost upon death at age 80, with a Full Retirement Sum (FRS) of S$192,000 (in 2022), could be about S$160,000 (accumulated interest from 65 to 80).

For those deferring their payouts to age 70 under the Standard Plan, the relative loss of accumulated interest upon death may be even higher.

And also, for those who opt for the ERS which has just been increased to up to 4 times of the BRS in the Budget– similarly, the accumulated interest lost may be even higher.

Another possible implication of the change may be that there are 249, 000 CPF members who have invested $5.8 billion( invested sum– not the current value) from their SA, as of 4Q2023. So, for those who liquidate after age 55, does it mean that the proceeds may be returned to the OA( 2.5%), instead of the SA( 4.08%) previously, for those who have met their BRS?

The removal of the SA after 55 may lead to less interest to those who choose not to have their money transferred to RA from their OA, after their SA closure.

For those who choose to transfer to RA- they may arguably, lose the flexibility of withdrawal under the SA after 55, if they have met the BRS.

For those who are working after 55- their CPF contribution portion which goes into SA previously, will now go to OA, at 2.5%, instead of SA's 4.08%, for those who have met their BRS.

For example, with the 1.5% increase in the CPF contribution rate for age 55 to 65- the current 31% contribution rate for age 55 to 60 becomes 32.5%.

Currently for age 55 to 60- 8.5% goes to SA. How much of the 1.5% increase announced in the Budget will go into the OA, for those who have met their BRS, since the SA will be closed?


Leong Sze Hian



15 Responses to “Closure of CPF’s SA for age over 55 – Implications for retirement planning”

  • More CPF taken away:

    Congratulations to the civil or uncivil serpents. Why give CPF member any higher returns than strictly necessary?

    Remember we are the most untouchable trustees of their CPF money.

    GD Star Rating
  • BS:

    Next RA will return member voucher.

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  • Light The Way:

    Robbed by an Accountant and a Lawyer.

    Your modern day Bonnie and Clyde.

    You get what you voted for.

    GD Star Rating
  • rice:

    More and more Singaporeans will likely find it practically impossible to enjoy “HAPPY AGEING” in the country they helped built.
    It is such a big $hame.
    Yet,when taking out sgs’ reserves to TIDE OVER difficult times like last Covid pandemic,the G thinks sgs who helped built Sg deserves much less than even intra-company FT-transferees?!

    Are our sgs’reserves meant for helping our own needy sgs or for G to show off by $quandering on much less deserving Foreigners who Rob our jobs?

    So,we “tax” the poor among the sgs and subsidise the rich sgs and FTs ?
    $600 out of a claimed Per Capita grant of $23.5K is indeed a form of “TAX” OR EXTORTION,is it not effectively speaking?

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  • MillionDollar:

    Many pension funds in several first world countries gave between 6% to 15% annual return in the past two decades.

    Those funds are being managed privately and regulated under the law.
    The workers have choices to pick the funds for their pension saving.
    The funds publish annual reports on their performance and funancial statements.


    We Singaporean really dumb and ignorant, happy with 2.5~4% shit return which can’t even beat inflation.

    While those CPF fund provides source of cheap capital for various gov agencies, making their CEOs & executives handsomely wealthy, laughing all the way with many months of annual bonuses and special bonuses.

    So stupid to allow CPF to run so opaque and wildly.

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  • Harder Truths:

    The people’s party just squeezing their voters for every cent. The $tupid $heeple think this is the end? Wait for more of the same akan dating…

    Does it matter? Is it important?
    Short answer: No.
    Long answer: No.

    GD Star Rating
  • Reform:

    To remove SA because of shielding is SIMPLY an EXCUSE, a WAYANG show by Pappy in the light of pending GE.

    What we need is a CPF reform to HELP the seniors age well & improve their lives with adequate pension fund.

    For a start we need a change of name to show focus by govt to provide adequate pension fund that will help the seniors for the rest of their retirement years from their many years of hard labour towards building up of nation’s reserves and well-being!


    GD Star Rating
  • MillionDollar:

    Simple calculation:

    A. $5,000 with annual return of 4% for 20 years grows to

    B. $5,000 with annual return of 6% for 20 years grows to

    C. $5,000 with annual return of 12% for 20 years grows to

    If each year CPF saving adds a constant $5,000 (annuity) contribution then:

    A1. Will have $159,846 at 20th year @ 4%

    B1. Will have $199,963 at 20th year @ 6%

    C1. Will have $252,144 at 20th year @ 8%

    The reason CPF pays so low interest compared to other nation’s pension funds is so that your retirement savings is insufficient at the expense of providing cheap funds to the gov investment agencies to make extraordinary returns.

    And secondarily, if you get a return of 8% for CPF, why would you need to work if not for just to stay active? By 45 years old you would have retired and work on things that you like if you are not too demanding financially and still have adequate retirement funds available.

    By making your retirement funds inadequate, giving you low interest returns, you will be constantly at the edge of financial dependency on gov to provide you with one off treats everytimes with GE is near. And still have to work even at 70 year old.

    Its like train caines with treats. SG has become a zombie nation.

    GD Star Rating
  • MillionDollar:

    For those curious at 12% interest, $5,000 annuity for 20 years scenario, it will be $408,493 on the 20th year.

    Correction to above entry:
    C. $5,000 with annual return of 8% for 20 years grows to
    $23,305 (instead of 12% it was 8% calcution)

    GD Star Rating
  • MillionBonus:

    Fund managers can reward themselves with super big bonuses. CPF members can continue hard work till their 80s.

    What can we do when they refuse to save themselves?

    MillionDollar: The reason CPF pays so low interest compared to other nation’s pension funds is so that your retirement savings is insufficient at the expense of providing cheap funds to the gov investment agencies to make extraordinary returns.

    GD Star Rating
  • BS:

    Drugs = $ =drugs

    GD Star Rating
  • 道高一尺 魔高一丈!:

    公元二零二四年,二月二十四日,联合早报特约评论文章,“家有余粮的大智慧” 里提到:

    “新加坡的某个在野党就在最近在国会辩论时,根据公开的财务数据,估算出新加坡国家储备金总额至少达到1万两千亿元。如果按照“我的钱我来支配”的民粹思维,一万两千亿元“均富” 到361万新加坡公民身上,每个人就至少可分得33万元。一个平常的四口之家,瞬间实现“百万富翁” 的人生巅峰”。


    真担心新加坡有一天会出现这样的选举结果,因为“道高一尺, 魔高一丈”哪!


    GD Star Rating

    Public Housing interest and inflation removes almost all the interest of the CPF.GICs and TH free monies to govt. to do as they please.It is the reason there is no accountability to Public although supposedly owned by Ministry of Finance.

    GD Star Rating
  • rice:

    Tonight is Chap Goj Meh.
    Very quiet compared to years gone by when sgs were mostly holding decent jobs.
    These days Chinese New Year season seem gloomy.
    Even Hari Raya used to be more celebrated in the past with many HDB flats lighted up.

    The gloominess is all-telling if there is general prosperity among true blue sgs.

    Festive moods do demonstrate the economic well-being of the citizens.
    I am sure we all can note the lull.
    Yet,some PAPple are boasting about prosperity of sgs.
    WHICH sgs?
    Go figure guts!

    GD Star Rating
  • MillionDollar:

    In 2024 the FRS is $205,800.
    BRS is $102,900.

    What’s the difference between SA and OA?
    As at 2024 Feb, OA interest is 2.5%, SA interest 4.08%.
    – $102,900 in SA at 4.08%,
    – the interest payout for that year will be: $4,198.32
    – assuming no fresh work funds added to SA, and you are not withdrawing for any emergency use, from yr-55 to yr-65 (start of draw-down age) the sum of $102,900 will grow to $152,492.87 which is $50,592.87 of interest payout for 10years.

    – $102,900 force feed into OA at 2.5%,
    – the interest payout for that year will be: $2,572.50
    – assuming the same scenario above, but with IA interest rate, the sum of $102,900 will grow to $131,720.70, total interest payout of $28,820.70

    The difference is $21,709.17 lesser or 43% lesser.

    Thus, do you want:
    A. Place the sum of $102,900 into RA, lockup another 10 years, followed by nearly 25 to 30 years of conditional release of funds at age 65 or 70, not catering for any emergencies situations? Slow feed you towards death bed…; or
    B. Place the sum of $102,900 into OA, with the flexibility of emergency withdraw, but give you 43% lesser?

    Some senior folks might investing in high risk investments because trying to make back the lower OA interest losses.

    What is the the impact of closing SA and force you to place money in either OA or RA?

    This is never about flexibility of withdrawal comes with lesser interest. But to save billions, if not trillions $ of interest payout to retiring CPF members. Drive the knife further into your heart.

    It is hypocrisy to say to help you to retire. It is nonetheless to lockup significant amount of funds away from access by making inadequate returns on your hardwork earnings, forcing you into unnecessary risks. And lifetime work even the economy really unable to employ you in old age.

    For those of you in your 20s, 30s, another 30 years is a long way to go. Do you think you will have any better situations with CPF than the current seniors when your time comes? If the past is a mirror, then your situation is dire.

    GD Star Rating

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