I am contemplating if I should transfer my savings in my CPF Ordinary Account (OA) to my Special Account (SA). If I do transfer savings from the OA to the SA, I will be able to earn higher interest. However, I do know that the transfer is irreversible and you can only transfer an amount up to the prevailing Minimum Sum in your SA.
CPF (hopefully everyone knows it is called Central Provident Fund) is Singapore's social security system that enables Singaporeans and Permanent Residents to set aside funds for retirement. It also addresses healthcare and home ownership.
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| Source: ASSI |
The CPF savings in the OA earn a guaranteed interest rate of 2.5% per year, while savings in the SA earn a guaranteed interest rate of 4% per year. There is an additional 1% interest per year for the first S$60,000 of your combined CPF balances.
Read: CPF Explained
Recently, I read AK blog entry titled - A lot of money in my CPF SA is from the Government, which he also decided to reveal his CPF SA number publicly for the first time. AK has beefed up his CPF SA through OA-SA transfers and even voluntary contribution. To cut the story short, just look at the interest paid to his CPF SA - SS$7,651.65.
So, is beefing up my CPF SA a good idea. In theory, the higher interest compounded will make my money work harder. This will purely be for my retirement account and I will have less flexibility over the cash. In AK's words, "Why not let the government help me meet the minimum sum?"
The government would have to pay more interest with a higher balance in your CPF SA and this will go towards meeting the minimum sum required at retirement age.
Logical as it sounds, the question is should I use the savings in the OA to pay for my upcoming house or should i transfer some savings over to the SA to earn a higher interest.
Transferring CPF OA to SA, depending who you are asking?
ReplyDeleteHi Createwealth8888, you are right about that? What is your take about this then? I would like to hear your views.
DeleteRead? Top Up CPF SA From CPF OA? Depending On Who You Ask! (2)
DeleteA year after this article, has there been any enlightenment on this topic?
ReplyDeleteHi Wei Han, i did the transfer and i wrote it in a separate blog entry.
Deletehttp://routetopassiveincome.blogspot.sg/2016/01/my-first-transfer-from-cpf-oa-to-cpf-sa.html