What is CPF and how does it work in Singapore?

CPF (Central Provident Fund) is Singapore's mandatory social security savings scheme. Both employees and employers contribute a percentage of monthly wages into three main accounts: Ordinary Account (OA) for housing and investments, Special Account (SA) for retirement, and Medisave Account (MA) for healthcare. For employees under 55, total contribution is 37% of wages (20% from employee, 17% from employer). CPF provides guaranteed interest rates and helps Singaporeans save for retirement, healthcare, and housing needs.

What are the three CPF accounts and what are they used for?

The three main CPF accounts are: (1) Ordinary Account (OA) - earns 2.5% interest, used for housing, insurance, and approved investments; you can withdraw for HDB down payment, monthly loan payments, and property purchases, (2) Special Account (SA) - earns 4% interest, used exclusively for retirement and approved investments; funds are locked until retirement age, and (3) Medisave Account (MA) - earns 4% interest, used for healthcare expenses including hospitalization, outpatient care, and MediShield Life premiums. At age 55, balances from OA and SA are transferred to Retirement Account (RA) for retirement payouts.

What are the CPF contribution rates in 2026?

For employees under 55 years old in 2026, total CPF contribution is 37% of monthly wages: 20% from employee and 17% from employer. These contributions are allocated as: 23% to OA, 6% to SA, and 8% to MA. The allocation changes with age - employees 55-60 have lower contribution rates (26% total) with more going to MA for healthcare. There is a monthly wage ceiling of $6,000 (contributions capped at $2,220) and an annual wage ceiling of $102,000 for bonus contributions. Self-employed persons must make MediSave contributions.

What are the CPF interest rates?

CPF interest rates in 2026 are: Ordinary Account (OA) earns 2.5% per annum, Special Account (SA) and Medisave Account (MA) earn 4% per annum, and Retirement Account (RA) earns 4% per annum. Additionally, the first $60,000 of your combined CPF balances (with up to $20,000 from OA) earns an extra 1% interest. This means your SA/MA/RA can earn up to 5% on the first $40,000 and your OA earns up to 3.5% on the first $20,000. These rates are guaranteed and risk-free, making CPF an attractive savings vehicle compared to bank deposits.

When can I withdraw my CPF savings?

CPF withdrawal rules vary by account and age: (1) Before 55 - You can use OA for housing and approved investments; SA and MA are locked for retirement and healthcare respectively, (2) At age 55 - You can withdraw up to $5,000 or $5,000 above Full Retirement Sum (whichever is higher) from your Retirement Account; remaining balance is set aside for monthly payouts, (3) From age 65 onwards - You receive monthly CPF LIFE payouts from your RA for life, and (4) Special withdrawal - Early withdrawal allowed for terminal illness, permanent emigration, or if you meet the Basic Retirement Sum. You cannot fully withdraw all CPF until you meet specific criteria.

How can I maximize my CPF savings?

To maximize CPF savings: (1) Make voluntary contributions to Special Account (SA) to earn guaranteed 4% (up to 5% on first $40,000) - especially effective if you have excess cash earning low interest elsewhere, (2) Transfer OA to SA if you don't need OA funds for housing to enjoy higher 4% vs 2.5% interest, (3) Maximize the extra 1% interest by maintaining at least $60,000 combined balance with $20,000 in OA, (4) Top up your or your loved ones' Retirement Account to receive tax relief up to $8,000 per year, (5) Avoid depleting OA for property - consider if investment returns exceed 2.5%, and (6) Delay CPF LIFE payouts to age 70 for higher monthly payments. Compound interest over decades makes even small optimizations significant.

What is CPF? Complete Guide for Singapore (2025)

If you're working in Singapore, you've probably seen CPF deductions on your payslip. But what exactly is CPF, and why does it matter for your financial future? This comprehensive guide explains everything you need to know about Singapore's Central Provident Fund system.

What is CPF?

The Central Provident Fund (CPF) is Singapore's comprehensive social security system. Established in 1955, CPF helps working Singaporeans and Permanent Residents save for retirement, healthcare, and housing.

Unlike voluntary savings schemes, CPF contributions are mandatory for most employees. Both you and your employer contribute a percentage of your monthly wages to your CPF accounts. These savings grow with attractive interest rates and can be used for specific purposes throughout your life.

DID YOU KNOW?

CPF is one of the world's most comprehensive social security systems, covering retirement, healthcare, housing, and family protection all in one integrated scheme.

The Three CPF Accounts Explained

Your CPF savings are allocated into three separate accounts, each serving a different purpose:

Ordinary Account

For housing, education, insurance, and investments

Interest Rate: 2.5% p.a.

Allocation (≤55): 23%

Special Account

For retirement and investment in retirement-related products

Interest Rate: 4% p.a.

Allocation (≤55): 6%

MediSave Account

For hospitalization and approved medical expenses

Interest Rate: 4% p.a.

Allocation (≤55): 8%

When you turn 55, a fourth account called the Retirement Account (RA) is created. Your OA and SA savings are transferred to this account to fund your retirement payouts.

CPF Contribution Rates (2025)

CPF contributions are shared between you (employee) and your employer. The rates depend on your age and residency status. Here are the rates for Singapore Citizens and PRs (from 3rd year):

Age Group	Employee	Employer	Total
55 and below	20%	17%	37%
Above 55 to 60	18%	16%	34%
Above 60 to 65	12.5%	12.5%	25%
Above 65 to 70	7.5%	9%	16.5%
Above 70	5	7.5	12.5%

For example, if you're 30 years old earning $5,000 per month, your CPF contributions would be:

Employee contribution: $5,000 × 20% = $1,000
Employer contribution: $5,000 × 17% = $850
Total CPF contribution: $1,850 per month

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CPF Wage Ceilings

CPF contributions are subject to wage ceilings, which means there's a maximum amount on which CPF is calculated:

Ordinary Wage (OW) Ceiling: $6,800 per month (increasing to $7,400 in Jan 2025, then $8,000 by 2026)
Additional Wage (AW) Ceiling: $102,000 - Total OW subject to CPF for the year

If your monthly salary exceeds the OW ceiling, CPF contributions are only calculated on the ceiling amount. For instance, if you earn $10,000 monthly, CPF is computed on $6,800 (2024 ceiling), not $10,000.

CPF Interest Rates

One of the best features of CPF is the attractive, risk-free interest rates your savings earn:

CPF Interest Rates

Base Interest Rates

Ordinary Account (OA) 2.5% p.a.

Special Account (SA) 4% p.a.

MediSave Account (MA) 4% p.a.

Retirement Account (RA) 4% p.a.

Extra Interest

All Members

+1% on first $60,000

(Up to $20,000 from OA)

Members 55 and above

Additional +1% on first $30,000

(Up to $20,000 from OA)

This means your SA savings can effectively earn up to 5% p.a. (4% base + 1% extra interest) — one of the best risk-free returns available in Singapore.

How Can You Use Your CPF?

CPF isn't just for retirement. Here are the key ways you can use your CPF savings:

1. Housing

Your Ordinary Account (OA) can be used to:

Pay for HDB flat downpayment and monthly mortgage
Purchase private property (subject to conditions)
Pay stamp duties, legal fees, and other housing-related costs

2. Healthcare

Your MediSave Account (MA) helps cover:

Hospitalization bills at hospitals and approved institutions
Selected outpatient treatments (chemotherapy, dialysis, etc.)
MediShield Life and Integrated Shield Plan premiums
Vaccinations and health screenings
Healthcare expenses for immediate family members

3. Retirement

When you reach your payout eligibility age (currently 65), you'll receive monthly payouts from CPF LIFE or the Retirement Sum Scheme, providing you with a steady income for life.

4. Education

OA savings can be used to pay for approved education courses at local institutions for yourself or your children through the CPF Education Scheme.

5. Investments

Through the CPF Investment Scheme (CPFIS), you can invest your OA and SA savings in approved instruments like unit trusts, ETFs, bonds, and shares to potentially earn higher returns.

Key CPF Milestones

Understanding key age milestones helps you plan your CPF journey:

Age 55

Retirement Account Created

Your RA is created and savings from OA & SA are transferred to meet the Full Retirement Sum (FRS).

Age 60

Lower Contribution Rates

CPF contribution rates decrease. You can also start your CPF LIFE application.

Age 65

Payout Eligibility Age

You can start receiving monthly payouts from CPF LIFE or Retirement Sum Scheme.

Age 70

Latest Payout Start

Payouts must start by age 70. Delaying payouts results in higher monthly amounts.

Tips to Maximize Your CPF

Here are practical strategies to make the most of your CPF:

Top up your SA voluntarily: Enjoy tax relief (up to $8,000 for self, $8,000 for family members) and earn 4% interest
Transfer OA to SA: Move excess OA funds to SA for higher interest (note: this is irreversible)
Start CPF LIFE early: Earlier contributions mean higher monthly payouts
Minimize OA usage for housing: Keep more in CPF to benefit from compound interest
Consider your CPFIS investments carefully: Many investors underperform the risk-free CPF rates
Check your CPF regularly: Log in to the CPF website to track your balances and plan ahead

CPF vs Private Savings: Why CPF Matters

While CPF has withdrawal restrictions, it offers significant advantages:

Feature	CPF	Bank Savings
Interest Rate	2.5% - 6%	0.05% - 2%
Tax Relief	Yes (for top-ups)	No
Government Guarantee	Yes	Up to $100k (SDIC)
Compound Growth	Guaranteed	Variable
Forced Savings	Yes	No

For most Singaporeans, maximizing CPF before investing elsewhere makes financial sense due to the guaranteed returns and tax benefits.

Conclusion

CPF is more than just a retirement fund — it's a comprehensive financial safety net that supports your housing, healthcare, and retirement needs. Understanding how CPF works empowers you to make smarter financial decisions and maximize your savings.

Whether you're just starting your career or planning for retirement, taking the time to understand and optimize your CPF can significantly impact your financial future.

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Use our free CPF Contribution Calculator to see exactly how much goes into your CPF each month.

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Disclaimer: This article is for educational purposes only and does not constitute financial advice. For the latest CPF policies and rates, please visit the official CPF Board website at cpf.gov.sg.

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What is CPF? Complete Guide for Singapore (2025)

What is CPF?

DID YOU KNOW?

The Three CPF Accounts Explained

Ordinary Account

Special Account

MediSave Account

CPF Contribution Rates (2025)

CPF Wage Ceilings

CPF Interest Rates

CPF Interest Rates

Base Interest Rates

Extra Interest

How Can You Use Your CPF?

1. Housing

2. Healthcare

3. Retirement

4. Education

5. Investments

Key CPF Milestones

Retirement Account Created

Lower Contribution Rates

Payout Eligibility Age

Latest Payout Start

Tips to Maximize Your CPF

CPF vs Private Savings: Why CPF Matters

Conclusion

Calculate Your CPF Today

About the Author

CPF Calculator Team