How can I be prepared for retirement?


CPF101 for Fresh Graduates

A group of fresh graduates
Just when you thought you were done with studying for good, your first paycheck arrives and looking at the contributions to your three CPF accounts leaves you with more questions than answers. Fret not because CPF isn't as complicated as it seems! Here's a crash course on your three accounts to start with:

CPF 101 infographic

1. Ordinary Account (OA) 

With an interest rate of up to 3.5%* per annum, the OA is the first CPF account most Singaporeans get acquainted with. This is because you can use your OA savings to finance your home loans and a number of associated costs via the Public Housing SchemePrivate Properties Scheme or .

Your OA savings also covers the premiums of the Dependants' Protection Scheme and Home Protection Scheme. These two schemes serve to protect you and your loved ones in the event of death or terminal illness or total permanent disability. Lastly, if you have more than $20,000 in your OA, you are eligible to invest your savings to enhance your retirement funds using the CPF Investment Scheme. This is only advisable for those who are confident in investing though, as it may be hard to earn more than the risk-free interest rates CPF promises.

2. Special Account (SA)  

The higher interest rate of up to 5%* per annum in your SA allows your savings to grow in the long term to form a substantial amount for retirement. This amount is then combined with any remaining OA savings you have at age 55 to form a retirement sum in a fourth account, the Retirement Account (RA). Having this retirement sum in your RA allows you to join the CPF LIFE scheme so you can receive lifelong retirement income in the form of monthly payouts.

Similar to your OA, your SA savings can also be used for the purpose of investment via the CPF Investment Scheme if you have more than $40,000 in your SA. This is only for retirement-related products though.

3. Medisave Account (MA) 

Your MA savings earn up to 5%* per annum as well, and provides for your healthcare needs by covering your basic medical expenses. You can use your MA savings to pay for a wide range of treatments and procedures from health screenings to vaccinations. In addition, your MA savings can be used to pay for the premiums of approved medical insurance, such as MediShield Life and Integrated Shield Plans, to provide you with another layer of healthcare protection.

*The above interest rates include an additional 1% interest paid on the first $60,000 of a member's combined balances (with up to $20,000 from the OA)

This article was first published on AreYouReady?, an initiative of the Central Provident Fund Board, on 17 January 2017.