How can you improve your CPF strategy to maximise your returns and grow your savings? Here are two ways you can do so:
1. Top up your Special or Retirement Account
Through the Retirement Sum Topping-Up Scheme (RSTU), you can top up your Special Account (SA) if you’re below 55, or Retirement Account (RA) if you’re 55 and above, to build your retirement savings.
When you top up in January rather than December, you can leverage on the power of compound interest to earn around 20% more1 interest over 10 years! You can even enjoy tax relief equivalent to the top-up amount, up to $7,000 per calendar year2.
2. Make voluntary contributions to your Medisave Account (MA)
Another way to increase your CPF savings is to grow your MA savings by making voluntary contributions3 up to the Basic Healthcare Sum (BHS), which is $54,500 in 2018. This would ensure that you have sufficient savings for future healthcare needs, as your MA savings can be used to pay for medical care and hospitalisation expenses as well as your MediShield Life premiums.
Once you have reached your BHS, any future mandatory MA contributions from your salary and your employer will be automatically transferred to your SA or RA to increase your retirement savings4.
1Based on current Special/Retirement Account interest rates of up to 6% per annum+, with $7,000 annual top-up, and $0 starting CPF balances.
+CPF savings in the Special and Retirement Accounts currently earn interest rates of 4% per year. The first $60,000 of your combined CPF balances, of which up to $20,000 comes from your OA, earn an additional 1% interest per year. An additional 1% interest is paid on the first $30,000 of combined CPF balances for all members aged 55 and above.
2Conditions apply. For more information, please refer to po.st/RSTU
3The maximum amount for Voluntary Contributions to your MA is subject to the CPF Annual Limit ($37,740), or your BHS, whichever is lower.
4Any mandatory Medisave contributions in excess of your BHS will be transferred to the SA for members aged below 55 if you do not have the Full Retirement Sum, and to the RA if you are aged 55 and above. Otherwise, the excess CPF contributions will be transferred to the OA.
Information accurate as at 6 February 2018