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Unemployed, almost 55 and worried about CPF.

Thursday, July 21, 2016

Reader says:
I have been following your useful CPF blog and learn alot. Lately I noticed something quite disturbing and what i deem as unfair.

We live a in HDB flat which had been fully paid off about 8 years ago. 

But I only noticed recently that the accured interest (supposed this is the amount I owed to CPF Board) has been increasing every month even after I fully paid off my flat long ago. 

I feel that this practice is unfair.

The accured interest should stop increasing the year that we pay off our loan. 

This kind of contradict the saying that the CPF money is ours. Seems that we always owe the government something somewhere.

It appears quite ridiculous because we had already paid hundred of thousands in interest during the loan term but still have to pay interest even after paying off the loan completely. 

If we borrow from banks, the interest would had stop once we clear the loan right?

I am unemployed and will reach 55 in a few years' time, how will this affect me? 

Kind of worried as retirement approach and without a job for sometime now.

I believed many Singaporean are unaware of this because we don't really track this item. 

How can we deal with this government policy? 

Do we have to pay CPF Board that substantial amount of interest if we sell off our HDB or downgrade to a smaller unit? 

Or when we reach 55 or 65? I get the feeling that one day I have to pay back that huge interest amount. 

How to retire peacefully without worrying about money in this place?

If I give the flat to my son later when I pass on, does he has to take over that accured interest?
Hope you can advise and share your thoughts.

Many thanks AK.
Best Regards

AK says:
The CPF is to help us with retirement adequacy. If we use the CPF money to pay for our homes, there is an opportunity cost. 

The government stops paying us interest and if we should sell our home, we have to pay ourselves interest in order not to compromise on the original purpose of the CPF.

In your case, you might be interested in this blog post:

Although it might appear otherwise, we don't pay the CPF Board, we are paying ourselves.

Upon reaching age 55, if you already have the MS (now the FRS) in your CPF account, you don't have to pay yourself anything if you were to sell your flat. 

The objective of the CPF to help with your retirement adequacy has been met.

If you do not have the FRS yet, then, it is a different story. 

Some of the money from the sale of your flat will have to go to your CPF account to fulfil this objective. 

There is also the option of BRS in which you pledge the value of your flat but that is another topic.

As long as we remember what is CPF's primary objective, everything makes sense.


unluckid said...


for the accrued interest, what happens if we don't hit the FRS, but the BRS (half of FRS) instead?

AK71 said...

Hi unluckid,

This is my understanding:
We will have to pledge an equivalent value from the property we used our CPF savings for to make the FRS. So, at age 55 and above, if we should sell that property, we will have to top up to the FRS with the proceeds. Anything beyond that, if available, we can take out from our CPF account. Any accrued interest we owe to our CPF-OA becomes meaningless then and we do not have to repay that debt.

ruby said...

Hi, at one of the CPF Talks, I understand that if you are more than 55 years old like say 57 years old and then you decide to sell your property. Then whatever fund that you have used from CPF will need to be refunded to CPFOA. The fund is not automatically transfer to RA. But you can top up RA to the FRS/ERS/BRS using CPFOA.
You can always check with CPF staff or attend one of their talks to clarify your doubt.

AK71 said...

Hi Ruby,

It would depend on the age of the CPF member too because the MS required is much lower for older members in their 60s and 70s, which is the case for my parents.

Yes, best to check with CPF Board. ;)

AK71 said...

From my FB wall:

Jack James:
"... I also interested to know if I passed my HDB to my kid , what will happen to the accrued interest in CPF , does it carry on ? It does NOT make sense if one dies they still keep track the accrued interest . It got to stop when one dies , I think ..."

Gabriel Tham:
"what if not fully paid up? if pass on then the next owner take over the loan and interest? what if the income level of next owner not high enough to afford?"

"If owner dies, insurance pays."

See: Home Protection Scheme.

What is the Home Protection Scheme (HPS)?

The HPS is a mortgage-reducing insurance that protects members and their families against losing their HDB flat in the event of death, terminal illness or total permanent disability. HPS insures members up to age 65 or until the housing loans are paid up, whichever is earlier.​

Do I need to be insured under HPS?

​You have to be insured under HPS if you are using your CPF savings to pay your monthly housing loan instalments on your HDB flat. HPS does not cover private residential properties, such as executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats.

When will my HPS cover start?

Your HPS cover starts when you meet all of the following conditions:

You are the legal owner of the flat.
You have completed the loan application with HDB or the approved mortgagee and are now legally responsible for the loan.
You have made your health declaration which is accepted for HPS coverage.
You have paid the first HPS premium.

KW said...

Hi AK,

Let have some discussion on below situation;
below 55, met FRS and own a fully paid HDB. Accrued interest is currently around $45k
My question is, if HDB is sold and have a gain over buy price of $100k. Base on meeting FRS, does this mean the accrued interest of $45k does not need to be return to OA from the $100k gain?

AK71 said...

Hi KW,

If we should sell our flat at age 55 or older, if we have enough to meet the FRS, the balance we can withdraw in full. Accrued interest doesn't figure in this anymore.

If we sell the flat and are not 55 yet, then, yes, we will have to pay ourselves the accrued interest (i.e. money gets retained in the CPF). At age 55, when the CPF-RA is created, anything beyond the FRS, we can withdraw.

AK71 said...


Hi AK!

For HDB loan right, I understand that even if I have finish paying the flat, the accrued interest will still continue to snowball.

Then what happens if I don't sell my flat ever? Since the accrued interest will keep rolling, will CPF request me to return the sum at some point?




If you don't sell your flat ever, the accrued interest owed to yourself becomes a number on paper and has no real impact (other than acting as a reminder of how much interest income you have lost by using your CPF savings to purchase your home). :)

Best wishes,

AK71 said...

Jerry Lee:
For money owe to cpf-oa due to housing, if we sell our hdb by the time we r 55, but we have achieved FRS, do we still need to "pay back" the money owe with accrued interest to our CPF?

As long as you sell before you are 55 and before the creation of your RA, you have to pay back the accrued interest.

AK71 said...

On my FB wall:
Kelvin Tan:
I believe that, even though you have to pay back the accrued interest, but at 55, if you reached the FRS, you can immediately take out all of that in cash if you want to? Assuming of course you are not aiming for ERS.

AK71 said...

The money in my ordinary and special account has reached the minimum sum.
If I sell my condo only after 55 years old, and already have the required minimum sum of that time, do i still have to “pay back” the accrued interest?

No need.

AK71 said...

Xie Weiming:
Hi AK, if I am under 55. And when I sell away my house, I already have the minimum Sum. Do I still need to pay back the accrued interest?

Yes. Not 55 yet. Must pay.

AK71 said...

A reader sent me this which has been shared on Facebook by thousands of people so far:

"Recently, I was asked by CPF Board to return the total amount I used my CPF money plus interest when I sold my apartment.

"I was shocked and asked CPF staffs why I need to return my money when I already 66 years old, they said it a new rule regardless of your age.

"The amount I need to pay back is more than my selling price because of the accrued interest.

"Instead of asking back my 50% I took from my retirement fund they wanted the whole amount plus interest over 20 years.

"Why should I pay interest for my own money and why should I return my money when CPF had released my fund when I reached 55 years old?

"This has caused me financially because upfront I have to use my saving to pay agent commission, lawyer fee, flat rental, mover and other charges.

"CPF Board kept my whole selling price for 15 days without interest and returned my money after deducting the 50% of my retirement fund I pledge for my property.

"Apparently, only those who sold their properties were notified by the CPF Board of such unreasonable rules especially so for those way above 55 years old😰"

Reader asked me if this was true and I said he should read this blog and ask his friends to read it too:

AK71 said...

Xie Weiming says...
I thought for those above 55 and u have met the minimum Sim. Then no need to repay the accrual interest?

AK says...
Yes, if you set aside the FRS in your RA, you could withdraw all the remaining money from your CPF OA and/or SA at 55. The accrued interest becomes a non-issue.

AK71 said...

Reader says...
hi. i have a question on using cpf to pay for housing
if i take a hdb housing loan and finance that with cpf, the loan interest is 2.6%
when i sell the house, i need to pay back cpf OA at 2.5%
does that mean that my true cost of loan is 5.1%?

AK says...
haha... sounds like a lot, right?
You might want to read this blog.

AK71 said...

Raymond Ng says...
If you're =>55 and have pledge full BRS, you don't need to worry. If you sell property, and CPF ask you to return the accrue interest, it will go into your OA... which you can withdraw all if you wanted to.

Lee Jiahui says...
Once you have FRS, the accrued interest doesn't matter. It's like a placeholder for you to put in a big fixed deposit at 2.5% next time when you are flushed with cash (if ever).

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