Is CPF really that bad? (Part 1)

Try putting whatever you know about CPF aside before reading this post

Disclaimer; CPF is a mandatory thing for all Singaporeans/PR so knowing it is as important as maintaining your financial health

-Short Summary-

There are 3 Accounts in your CPF before you turn 55:

  • Ordinary Account (OA)
  • Special Account (SA)
  • Medisave Account (MA)

When you turn 55:

  • OA + SA = RA (Retirement Account)
  • MA = Acts like your health insurance

At this current point of our life, how much do we have for retirement (Cash/Savings) not including property, because we would want to be living comfortably like now (*assuming) ??

The average Joe and Jane most probably only have their money soaked in endowment plans and some weird insurance products. The question to you is when have you last counted the GUARENTEED (remember not the projected) return on these products?

If so, would it beat money accumulated in your CPF if the same premiums are put inside?

– Assuming that you only need the money for retirement and not now (Insurance policy plans that are signed up for are normally 15-25 years) –

So how is CPF good for our retirement?

Interest rate on each account (Before 55)

  • OA (2.5 – 3%)
  • SA (4 – 5%)
  • MA (4% – 5%)

Additional interest

  • Interest on (RA+MA)
    • 6% on the first 30k, 5% on the subsequent 30k [Within the first 60k bracket]
    • 4% for the next 60k and above


You earn $30k Annually, (Your) CPF contribution $6k, (Employer) CPF contribution $5.1k, Total contribution 11,100. Started working at age 25, currently age 35, retiring at age 55. Total CPF amount in your RA would at least have $749,224.54 and MA would be maxed.

Something you must know from this example

None of your CPF money is touched (pay HDB loan). Some money were transferred to your SA, to maximized the 6%,5% and 4% interest. This figure has bare the CPF allocation rate and no volunteer contributions have been made. No investment made.


Does your insurance beat it?

I’d not know, but I do believe you would likely get more from investing in your CPF than in any financial product your bancassurance/financial planner would advise you to buy.

If any mistakes were made in this post please help in commenting on them 🙂

“+1 Knowledge point”


9 thoughts on “Is CPF really that bad? (Part 1)

  1. Better don’t mix up CPF saving for retirement and insurance as protection against human asset and then start comparing them like Apple to Apple. Will your CPF saving pay you the same amount as the sum assured when claim is made?


  2. CPF is NOT a bad forced saving scheme but when PAP starts to tweak it as and when she likes it without full consultation with the stakeholders then it becomes bad. IMHO, PAP has abused the full trust and mandate from the people who voted her to power.


  3. As a long-term complementary savings scheme, CPF is very good, especially for middle-income & above.

    So good in fact, that if not for the annual limits & FRS etc, many wealthy people will want to put millions into their CPF. Overall portfolio diversification and protection against bankruptcy.

    But as a retirement scheme, CPF fails. It has failed since 1990s.

    That’s why even CPF changed its Mission Statement a few years ago. Not fake news horrr!!! 🙂


  4. Pingback: CPF – Aged 54 & below |

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s