Ways to Use CPF | How to Use CPF in Singapore Except Retirement

by Priyadarshini 12 July 2022

Most people believe that CPF is only for retirement and home loans. As a result, many people continue to have misconceptions regarding CPF. In this blog, we tell you ways to use CPF in Singapore

The CPF Scheme is a mandated savings and retirement plan for Singaporeans and Singapore Permanent Residents who work in Singapore. However, most people are still uncertain about what CPF can be used for.

You cannot access your CPF savings until you reach retirement age

The primary goal of your CPF contributions is to support you during your retirement years. As a result, most people believe that you can’t withdraw the money until you reach retirement age, which in Singapore is 63 years old. However, after you reach the age of 55, you can withdraw funds from your CPF as much and as frequently as you like.

The amount you can withdraw is determined by the balances in your CPF Ordinary Account (OA) and CPF Special Account (SA). The FRS is the money set aside in your CPF Retirement Account (RA) for you when you reach the age of 55 so that you can receive monthly CPF LIFE payouts when you reach the age of 65. The FRS amount is modified each year for inflation. The amount is S$192,00 for people turning 55 in 2022. If your OA and SA savings total between S$5,000 and the FRS, you can withdraw up to S$5,000, with the remainder going to your Retirement Account.

CPF is solely available for retirement 

One widespread misunderstanding is that your CPF is “money you can’t touch until you retire.” This could not be further from the truth. While the CPF is intended for retirement, it can also be utilized for the following purposes:

  • Obtaining financing for your property purchase
  • You can use your CPF OA savings to pay for your down payment on a home.
  • If you take out an HDB loan to purchase an HDB flat, you can utilize your CPF OA funds to cover the entire 15% downpayment.
  • If, on the other hand, you take out a bank loan to buy an HDB flat or private property, you can utilize up to 20% of your CPF OA funds to cover the 25% downpayment. The remaining 5% must be paid in cash.

You can use your CPF to pay for monthly home loan repayments, stamp duties, legal expenses, title search fees, and House Protection Scheme (HPS) insurance in addition to the downpayment on your home.

Taking care of medical bills

Every CPF member has a MediSave account, which is used to pay for healthcare expenses such as hospitalization, surgery, MediShield Life, ElderShield Life, or CareShield Life premiums, and treatments such as chemotherapy and renal dialysis. You can also use it to pay for medical procedures for immediate family members.

Use the CPF Education Scheme to pay for your education.

The CPF Education Scheme allows you to utilize your CPF OA savings to pay for tuition at recognized local colleges and polytechnics for yourself, your children, your spouse, or your sibling. However, the amount withdrawn from your CPF funds must be restored to your CPF account, along with any earned interest.

Financial product investment

Your CPF funds can also be invested in CPF investment schemes, such as the CPF Investment Scheme (CPFIS) and the Special Discounted Shares (SDS) Scheme. You can invest in ETFs, unit trusts, stocks, gold, government bonds, and endowment schemes, among other things. Before you may start investing with your CPF funds, you must have more than S$20,000 in your CPF OA or S$40,000 in your CPF SA.

You can utilize all of your CPF funds to purchase a home

One prevalent misperception among home purchasers is that they can use their CPF money to cover the cost of their property purchase totally. There are, however, limits to how much CPF you can spend, and after you’ve reached those limits, you’ll have to service your mortgage with cash, even if you have enough money in your CPF account.

CPF interest rates are set in stone

The CPF OA pays 2.5 percent interest per year, but the CPF SA, MediSave, and RA pay 4 percent interest per year. While interest rates have been stable for a long time, they are not fixed. In actuality, interest rates ranged from 2.5 percent to 6.5 percent from 1963 to June 1999 (the last time they were higher than 2.5 percent). However, you might earn higher interest rates on your CPF accounts.

Members 55 and under can earn up to 3.5 percent interest on OA savings and up to 5 percent on SA and MediSave Account savings. This is because CPF will pay you an additional 1% interest on your first S$60,000 in CPF holdings. However, keep in mind that this is limited to S$20,00 from your OA.

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