Funding your retirement is all about having enough in your Central Provident Fund (CPF) account. One way to make sure you have enough is through CPF Special Account (SA) Shielding — a low-risk trick guaranteed to grow your nest egg.
What is a CPF Retirement Account
When you turn 55, the CPF board sets up a Retirement Account (RA) for you. Money from your Savings Account (SA) and Ordinary Account (OA) will be transferred over.
The money in your RA will be used to give you a monthly income after you retire.
What is CPF SA Shielding
CPF SA Shielding increases your CPF interest rate by another 1.5%. It is done through your SA investments before you are 55.
To do this, transfer your SA funds out for investment purposes, so more money will have to be taken out from your OA to meet the RA’s full retirement sum.
This prevents your SA from being tapped on, essentially “shielding” your SA funds.
Why You Should Shield Your SA
An extra 1.5% interest makes a huge difference to your savings if you start investing early.
Here’s how the different accounts’ interest rates match up:
| Type of Account | Annual Interest Rate |
| Ordinary Account | 2.50% |
| Special Account | 4% |
| Retirement Account | 4% |
The SA and RA have a higher interest rate than the OA, so shielding your SA funds maximises the interest you earn from your CPF funds.
How To Shield Your SA
To shield your SA funds, follow these steps:
Step 1: Transfer SA funds for Investments
You can invest your CPF SA funds, but you need to keep at least S$40,000 in the account.
Take the remaining funds out and invest it under CPFIS, an investment scheme that allows CPF members to invest their CPF funds in assets like fixed deposits, unit trusts, insurance products, bonds, and shares.
Your CPF SA funds can be used to invest in:
- Investment-linked Insurance Products (excluding high-risk products)
- Unit Trusts (excluding high-risk products)
- Singapore Government Bonds
- Annuities
- Treasury Bills
- Endowment Policies
Step 2: Leave SA funds in Investments
Leave your SA funds in the assets you have invested in until after you turn 55. The CPF board will set up your RA with the remaining S$40,000 in your SA, and take the rest from your OA.
Step 3: Transfer Money Back to SA
Once your CPF RA is created, you can sell your investments and cash them out. Transfer the invested SA funds back to your SA account and enjoy the 4% interest rate.
Bonus Step: Top Up Your RA
For higher monthly payouts during your golden years, you can top up your RA up to the Enhanced Retirement Sum (ERS) .
You can only top up your RA to the ERS after you turn 55. The ERS is three times the Basic Retirement Sum (BRS) — CPF members who want higher monthly payouts should put more money into their RA.
Source: CPF
As of 18 February 2022, Finance Minister Lawrence Wong had announced some major budget measures – including raising the CPF BRS. Find out more about how it affects you.
How Much More Your Earn with CPF SA Shielding
The additional 1.5% is definitely worth the hassle. Here’s how much more you earn:
| If you invest $150,000 from your SA | After 10 Years (At Age 65) | After 20 Years (At Age 75) | After 30 Years (At Age 85) | After 40 Years (At Age 95) |
| Ordinary Account (2.5% interest) | S$192,012.68 | S$245,792.47 | S$314,635.14 | S$402,759.58 |
| Special Account (4% interest) | S$222,036.64 | S$328,668.47 | S$486,509.63 | S$720,153.09 |
| Difference | S$30,023.96 | S$82,876.00 | S$171,874.49 | S$317,393.51 |
After 40 years, that additional 1.5% in interest earns you an extra $317,000!
Start Today and Enjoy Your Retirement
Retirement can be a stress-free affair if you start planning early. CPF SA Shielding is a low-risk yet highly rewarding way to make sure you have enough for your retirement, so you can enjoy your golden years even more.
Have more retirement tips to share? We would love to hear them. Write to us at ask@plannerbee.co.
