Our Special Account is one of four CPF accounts we will have. From the moment we are born, we start of with three CPF accounts – Ordinary Account (OA), Special Account (SA) and MediSave Account (MA). When we turn 55, a Retirement Account (RA) will be opened. From 2025, the Retirement Account will no longer be a fourth CPF account, but will replace the Special Account.
Each of our CPF accounts is meant for different purposes, and in this article, we look at the role that our Special Account plays.
#1 The CPF Special Account Was Introduced In July 1977
When the CPF system started in 1955, people only had one account. This functioned similarly to what is currently termed our Ordinary Account. The Special Account was introduced in July 1977. The MediSave Account was introduced in April 1984 and the Retirement Account came into effect in January 1987.
Read Also: What Happens To Your CPF Monies After Transferring It To Your Retirement Account (RA) At Age 55?
#2 We Contribute Between 1.0% and 11.5% Into Our Special Account Throughout Our Career
Most of us grow our Special Account through monthly contributions from our salaries. Depending on our age, we contribute up to 20% of our salary to our CPF accounts, while our employers contribute another up to 17%. This combined amount is segmented into our OA, SA and MA (but not our RA). Again, this will change from 2025 – when the Retirement Account replaces the Special Account for those 55 and above.
A small group of people earning below $750 a month do not have to make any employee CPF contributions. Though, employers still have to make their share of the Employers CPF contributions for anyone earning more than $50 a month, including temp-staff, part-timers and other types of ad-hoc workers.
| Age (Years) | Allocation Rates (for monthly wages ≥ $750) | |||
| Ordinary Account (% of wage) |
Special Account (% of wage) |
Medisave Account (% of wage) |
Total (% of wage) |
|
| 35 and below | 23 | 6 | 8 | 37 |
| Above 35 to 45 | 21 | 7 | 9 | 37 |
| Above 45 to 50 | 19 | 8 | 10 | 37 |
| Above 50 to 55 | 15 | 11.5 | 10.5 | 37 |
| Above 55 to 60 | 12 | 7 | 10.5 | 29.5 |
| Above 60 to 65 | 3.5 | 6.5 | 10.5 | 20.5 |
| Above 65 to 70 | 1 | 4 | 10.5 | 15.5 |
| Above 70 | 1 | 1 | 10.5 | 12.5 |
Source: CPF
As we can see in the table, contributions to our Special Account start as the smallest component at the beginning of our career – at 6% of our monthly salary. It gradually grows to become the biggest component just before we turn 55 – at 11.5%. After 55, it again falls to the smallest component, as we would already have set aside our Full Retirement Sum (FRS) by 55.
Of course, we can also see that we start off contributing 37% to our CPF accounts up to the point we turn 55. Our CPF contributions then tail off until we only contribute up to 12.5% by the time we are above 70.
Since Jan 2022, the government has announced that CPF contribution rate for older workers will gradually increase – with a target rate by 2030:
| Age | 2016-2021 | 2022 | 2023 | 2024 | 2025 | By 2030 |
| ≤55 | 37 |
No Change |
||||
| >55 – 60 | 26 | 28.5 | 29.5 | 31 | 32.5 | 37 |
| >60 – 65 | 16.5 | 18.5 | 20.5 | 22 | 23.5 | 26 |
| >65 – 70 | 12.5 | 14 | 15.5 | 16.5 |
No Change |
|
| >70 | 12.5 |
No Change |
||||
During his Singapore Budget 2024 speech, DPM Lawrence Wong announced that CPF contribution rates will be increased for those aged above 55 to 65 in 2025. This will bring the contribution rates one step closer to the target rates. For those aged above 65 to 70, the target rates were hit in 2024 – and there are no foreseeable increments.
The higher contribution rates will be fully allocated to our Special Account, to secure our retirement adequacy.
Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55
#3 Our Special Account Balances Is Protected By A Floor Interest Rate of 4%
Apart from managing this scheme, the government also does its part to grow our Special Account balances by providing a floor interest rate of 4.0% per annum. Note that this is a floor rate, set by the government in 1999. In line with higher interest rates globally, our Special Account savings have earned slightly higher interest returns since the tail-end of 2023. From Jan to Mar 2024, we will earn 4.08% on our Special Account savings.
From 2008, the Special Account rate was pegged to the “12-month average yield of 10-year Singapore Government Securities plus 1%”. Using this calculation, the interest rate on our Special Account was 4.08%. This is higher than the floor rate, and thus we receive the higher amount.
Lastly, the 4.0% floor rate is a commitment by the government to grow our retirement funds. It is not set in legislation. The floor interest rate, on any CPF accounts, that is set in the CPF Act is 2.5%.
Read Also: Why CPF Needs To Review Interest Rates For Our Ordinary, Special, MediSave And Retirement Account
#4 Extra 1.0% Interest Payments Goes Into Our Special Account (Until Our Retirement Account Is Opened)
In 2008, to build our retirement adequacy, the government also committed to paying an extra interest of 1.0% on the first $60,000 of our combined CPF account savings (capped at up to $20,000 from our OA).
Extra interest received on monies in our Ordinary Account and Special Account will both flow into our Special Account or Retirement Account (if we are over 55). From 2025, the Retirement Account will replace the Special Account for those above 55.
After we turn 55, we also get an additional extra interest of 1.0% on the first $30,000 of our combined CPF account savings (capped at up to $20,000 from our OA). As our Retirement Account would have replaced the Special Account by this point, Additional extra interest earned on our RA or OA will flow into our RA.
Read Also: 15 Little-Known Things About CPF That Most Singaporeans Are Still Unaware About
#5 Our Special Account Is Closed At 55, And Replaced With Our Retirement Account
From 2025, those who turn 55 will no longer have four CPF accounts. The Retirement Account, which is created after we turn 55, will replace the Special Account.
Mandatory CPF contributions meant for our Special Account will instead go into our Retirement Account – further beefing up our retirement adequacy.
The interest rates that we earn on our Retirement Account is exactly the same as the interest rate we earn on our Special Account. It was slightly different before 2024, but was aligned from January 2024.
#6 If You Hit Your Basic Healthcare Sum (BHS), Your MediSave Contributions Go Into Your Special Account (Only Up To The FRS)
The Basic Healthcare Sum (BHS) is a cap on the amount that we can save in our MediSave Account (MA). The current cap is $71,500.
If we have reached this figure before we turn 55, there will be excess amounts from our salary contributions that cannot go into our MA anymore. These excesses will flow into our Special Account. However, if we have already hit the FRS, it will then flow into our Ordinary Account. The current FRS is $205,800 in 2024. The FRS also represents the maximum amount of money we can top-up to our Special Account.
If we are over 55, these excess amounts will flow into our Retirement Account instead. However, if we have already hit our Basic Retirement Sum (BRS) or Full Retirement Sum (FRS), the excess amounts will instead flow into our Ordinary Account.
Read Also: CPF Medisave: Here’s How Your Basic Healthcare Sum Might Look Like When You’re 65
#7 We Can Top Up Our Special Account Via The RSTU (And Earn Tax A Relief)
There are generally two ways to top up our CPF – via the Voluntary Contribution (VC) or the Retirement Sum Topping Up (RSTU) schemes. However, we can only make top-ups up to the Full Retirement Sum into our Special Account and Enhanced Retirement Sum into our Retirement Account (after we turn 55).
If we are choosing to make top-ups via the VC scheme, we can opt to make cash contributions to all three of our CPF accounts – OA, SA and MA – or just to our MA. When doing so, we are limited by the CPF Annual Limit, which is $37,740. In addition, we only receive tax relief for making VC top-ups to our MA, but not if we are making Voluntary Contributions to all three CPF accounts.
When we make RSTU top-ups, we receive a dollar-for-dollar tax relief of up to $8,000 for contributions into our own SA and another up to $8,000 for contributions to our loved ones’ SA. We can make RSTU contributions for any amounts up to the Full Retirement Sum (FRS) for those under 55 and up to the Enhanced Retirement Sum (ERS) for those 55 and above. RSTU contributions go into our Special Account if we are below 55 and into our Retirement Account for those 55 and above.
Apart from making cash top-ups via the RSTU scheme, we can also choose to transfer our OA funds into our SA to earn a higher interest rate.
Read Also: What’s The Maximum Amount You Can Contribute To Your CPF Accounts Each Year?
#8 We Can Invest Our Special Account Balances
Another way we can build our Special Account savings is by investing our SA balances through the CPF Investment Scheme (CPFIS). We can invest both our OA and SA balances if we choose to. Doing so, we are effectively trying to beat the interest rate paid on our SA balances (4.08%, and 2.5% paid on our OA balances). Of course, we can also choose to transfer our OA balances to our SA to earn more interest returns.
However, we can only invest anything above $40,000 in our Special Account (and anything above $20,000 in our Ordinary Account). We also need to take a Self-Awareness Questionnaire (SAQ) before we can invest our CPF monies.
The investments we can invest in for our Ordinary Account and Special Account are not the same. The list of available investments for our Special Account is more limited. Just as an example, you cannot utilise your Special Account funds to invest in shares or gold but you can do so with your Ordinary Account funds. With your Special Account funds, you can generally invest in unit trusts, investment-linked plans (ILP), Annuities, endowment plans and others.
To safeguard people who are investing our CPF funds, the government has mandated a removal of sales charges for new purchases and a reduction of wrap fees for both new and existing investments. For the full list of products you can invest in, you can head to the CPF website.
Read Also: Building Your Retirement Nest Egg: Pros & Cons Of Investing Your CPF Savings
#9 There Is A Maximum Cap We Can Top-Up To Our Special Account (And It Is Earmarked For Our Retirement Account)
In general, we can only top-up our Special Account up to the Full Retirement Sum (FRS). As mentioned, the current FRS is $205,800. However, even after hitting our FRS, our Special Account can continue to grow from our salary contributions.
When we turn 55, up to the Full Retirement Sum (FRS) will automatically flow into our Retirement Account. Funds in our Special Account will be the first that is drained out. This is because our Special Account will be closed and has always been meant for our long-term retirement needs. If we have insufficient SA balances, then funds from our Ordinary Account will be drained next.
We can also choose to contribute up to the Enhanced Retirement Sum (ERS) to our Retirement Account. The ERS is currently $308,700, or 1.5x the FRS. From 2025, the ERS will be raised to 2x the FRS – rising to $426,000 (4x FRS) rather than $319,500 (3x FRS).
Read Also: 8 Things To Know About The CPF Enhanced Retirement Sum (ERS)
#10 If You Continue To Work After 55, Your “Special Account” Contributions Will Go Into Your Retirement Account
As our Retirement Account replaces our Special Account after 55, it will continue growing with contributions from our salary contributions. For Those who continue to work after 55, our CPF contributions will continue to flow into our OA, RA and MA.
Read Also: How CPF LIFE Can Give You A Passive Monthly Income Worth The Median Salary – $3,000 – When You Retire In Singapore
This article was first published on 6 September 2021 and updated to reflect the latest information.
Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.
