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They chose financial independence over home ownership.

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Could I use the money contributed voluntarily to my CPF?

Tuesday, September 15, 2015

The General Election has generated much more interest in the CPF:

hmmm.....if I already use the cpf for my first hdb. Now, I got cash to top up my OA. Can I use the OA to buy my second property.....say, a condo?

Yes, of course, You could use the money in your CPF OA for purchase of a second property. It doesn't matter how the money found its way into the OA.

You could do Voluntary Contributions to max out the annual Contribution Cap, you could do it and see the money flowing into your OA, SA and MA. If your MA is maxed, then, the money flows only into your OA and SA.

I think this gives those who think they might need their CPF-OA money for purchase of a second property (or for some other purposes) some flexibility while earning higher interest. If they decide not to, then, simply keep the money in their CPF accounts and the money goes towards retirement funding. For people who have decided that they want to make contributions to their CPF for retirement funding purposes, then, it is probably better to do a MS Top Up to their SA which also gives them income tax relief for the first $7K contributed per year.

The CPF is a self-help institution. If we are able to help the system to help ourselves, we should give it serious consideration.

Important note:
"If you have already used CPF for a property and wish to use CPF for your second property, you can only use the excess CPF Ordinary Account savings for your second property after setting aside half of the prevailing Minimum Sum in your Special and Ordinary Accounts. The total CPF allowable for your second property is also capped at 100% of the Valuation Limit."(Source:

Related post:

Should a 20 yo do a VC or MS Top-Up?


ED said...

Hi AK,

How did you calculate that your VC required is $777.60?


AK71 said...

Hi Ed,

Oh, I just used my previous year's mandatory contribution as a guide. So, if the contribution cap was $30,600 and if the total mandatory contribution was $27,000 the year before, I could contribute another $3,600 voluntarily. So, I just sent CPF Board a cheque for anything less than $3,600 and they will apportion the money into my OA, SA and MA. :)

Steven said...


May i asked if one's annual gross salary is 85000 (assuming all taxable), he would have hit the CPF Annual Limit of 31450 automatically?

e.g. 85000 x 37% (contribution rate for <55yo) = 31450

if this is the case, is he eligible for any top up scheme to his OWN account? thanks!

Steven said...
This comment has been removed by the author.
Solace said...

I am hesitant in using VC contribution money in OA for purchase of second property.

In normal times, the Govt is paying me 2.5%. If i use for a second property, i will be paying the 2.5% as accrued interest myself when i realized the investment gain from the selling the 2nd property.

Hmmm, i would most likely rely on cash more if i ever need to purchase 2nd property.

My own preference would be max SA and MA to their prevailing min sum. Excess in OA most likely would be diverted to SA via transfer.

AK71 said...

Hi Steven,

If our earned income is high enough that our mandatory contribution to our CPF account hits the annual contribution cap, then, no voluntary contribution is allowed. However, we could still do Minimum Sum Top Ups to our CPF-SA if it has yet to hit the Minumum Sum (now called the Full Retirement Sum or FRS).

AK71 said...

Hi Solace,

I agree with you totally. In fact, you might remember one of my earlier blog posts which explains why I have so much in my CPF-OA.

See: How did AK amass so much money inhis CPF-OA

Now, even for the property that I call home, I utilise money from my CPF-OA sparingly in paying for it.

However, I think we shouldn't be too rigid because there could be an instance when we find a very good deal, a property that is undervalued. Then, it could be a good idea to utilise the money in the CPF-OA if our cash on hand is insufficient or if bank loans are difficult or expensive to get. ;)

Li Coo Coo said...

Hi All

Is best you seek CPF clarification. Is best get the answer from the horse mouth.

Nick said...

Hi Steven
The Central Provident Fund salary ceiling is currently capped at S$5,000 and will be raised to S$6,000 from Jan 1 next year.

We can't simply take the annual gross salary and multiply by the contribution rate to compute the total annual CPF contribution.

Mao Mao said...

I feel the rule is to prevent overzealous people from using their OA to over financing the 2nd property and becoming financially inadequate for retirement.

E H said...

And Japan just got downgraded.

AhJohn said...

Hi AK, you are pushing government to work harder.
According to the CPF Board, these top-ups amounted to about S$500 million last year, up 25 per cent compared to 2013.

AK71 said...

Hi AhJohn,

We work hard for our money. Our money should work hard for us. :)

I am not one to reject help from the government. ;)

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