What happens when your CPF SA is closed

By Shawn Lee

If you’ve only got a minute:

• When you turn 55, your CPF Special Account (SA) will be closed with these savings moved to your Retirement Account (RA) to meet the Full Retirement Sum (FRS) for your age group. If you have already met the FRS, the remaining SA funds will be transferred to your Ordinary Account (OA).
• You can move OA savings to RA for higher retirement payouts or leave them in OA to earn 2.5% p.a. interest with the option to withdraw anytime.
• If you are comfortable with taking investment risks, you may consider using your OA savings under the CPF Investment Scheme (CPFIS). Your investment options should align with your risk appetite, financial knowledge and goals.
• You can also withdraw your OA savings to invest or buy insurance that is not covered by CPFIS, giving you a wider range of options.

When you turn 55 years old, your CPF Special Account (SA) will be closed. These savings will then be moved to your Retirement Account (RA), up to your cohort's Full Retirement Sum (FRS), where it will continue to earn at least 4% interest annually.

If you have already met your FRS using cash or a mix of cash and property, any extra savings in your SA will be moved to your Ordinary Account (OA). These funds can be withdrawn and will earn at least 2.5% interest per year. However, funds moved from your SA to your OA will earn a lower interest rate of 2.5%, compared to the 4% it earned in the SA.

Do note that you will still receive 6% interest per year on the first S$30,000 of your total CPF balances (limited to S$20,000 from your Ordinary Account (OA)), and up to 5% on the next S$30,000 (also capped at S$20,000 from OA).

When your SA is closed, you will receive a hardcopy letter informing you of it along with an email or SMS if applicable. You can also check the funds transferred to your RA and/or OA by logging into your CPF account on the CPF website or mobile app and viewing your transaction history.

If you are wondering what to do with your CPF OA funds after the closure of your SA. Here are some options to consider:

1. Transfer OA Savings to RA for higher monthly CPF LIFE payouts

Starting in 2025, the Enhanced Retirement Sum (ERS) has been increased from 3 times the Basic Retirement Sum (BRS) to 4 times.

You can choose to transfer your OA savings to your RA at any time, up to the prevailing ERS, to enjoy higher long-term interest rates and receive larger retirement payouts.

With the CPF SA closure, there are various options available to you. Before making any decisions, it's important to consider your retirement goals, financial situation, and risk tolerance. Taking time to assess your options will help you make informed choices that align with your long-term financial objectives.

Additionally, you can continue to top up your RA to the prevailing ERS each year from age 55 to further increase your monthly payouts. However, do note that top-ups to RA are irreversible. Once transferred, the savings in your RA will only be available for retirement payouts.

*Estimated CPF LIFE monthly payouts calculated with the Standard Plan, using the CPF LIFE Estimator.

2. Keep the money in your OA and enjoy 2.5% interest

By keeping your funds in the OA, you will continue to earn at least 2.5% interest pa, as this is the legislated minimum rate for CPF OA savings. For example, from February to April 2025, the average interest rate was 0.45%, but the CPF OA interest rate stayed at 2.5%.

You can withdraw the funds at any time, just like a bank savings account, provided you have already met at least the FRS in your RA.

Note that the CPF OA interest rate could rise above 2.5% if the 3-month average of major local banks' interest rates exceeds this threshold.

3. Invest OA Funds via the CPF Investment Scheme (CPFIS)

If you have the need and are willing to take on investment risk in suitable products, you can invest your OA funds (above the S$20,000 threshold) under the CPF Investment Scheme (CPFIS) in options like T-bills, fixed deposits, insurance plans, unit trusts, and more. Your investment choices will depend on your risk tolerance, time horizon, financial knowledge, and investment objectives.

Before you begin investing, ensure you understand your financial goals and when you may need the funds. Consider your ability to absorb short-term losses and assess your overall financial situation.

When investments under the CPFIS are liquidated, the proceeds will return to your OA.

Get started with a CPF Investment Account and explore CPF-OA approved unit trusts with POSB here

4. Withdraw CPF savings for investments and insurance outside of CPFIS

If you wish to access a wider range of investment options, you can withdraw savings from your CPF OA for investments or insurance products that are not available under the CPFIS.

DBS offers a robust suite of multiple assets classes like equity, fixed income and multi assets, and exposure across developed, emerging, regional, and global/multi markets. They are available across different levels of risk appetite to suit your needs, to cater for growth and income generating objectives and to potentially achieve market returns higher than OA’s annual return of 2.5%. Using CPF monies to invest in unit trusts under CPFIS comes with zero sales charge. 

Some CPF members may hesitate to top up their RA to the prevailing ERS (this will be S$426,000 in 2025) and “lock up” their monies. If a CPF member prefers to have more liquidity, he may consider withdrawing the CPF monies to buy a retirement income insurance plan.

Although the effective return of the plan may be lower than that of the CPF LIFE scheme, the advantage is that the policyholder can enjoy some flexibility should he need to surrender the policy to raise funds. Retirement income insurance plans also allow you to choose your payout start date and the payout period so you can structure it according to your needs.

While this gives you more flexibility, bear in mind that once you withdraw your CPF OA savings in cash, there are limited CPF schemes to top up your OA in the future. This means you will miss out on the 2.5% guaranteed interest on those funds.

5. Withdraw CPF savings for immediate needs

If you have upcoming expenses that require immediate cash, you can withdraw the necessary amount from your CPF OA savings, provided it is above the FRS. It is prudent to withdraw only what you immediately need, as you can leave the remaining balance in your OA to continue earning the guaranteed 2.5% pa interest.

Conclusion

With the CPF SA closure, there are various options available to you. Before making any decisions, it's important to consider your retirement goals, financial situation, and risk tolerance. Taking time to assess your options will help you make informed choices that align with your long-term financial objectives.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.

All investments come with risks and you can lose money on your investment. Invest only if you understand and can monitor your investment. Diversify your investments and avoid investing a large portion of your money in a single product issuer. 

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