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CPF members above 55 should use it as a savings account. (Deposit for 5 years 11 months for higher returns?)

Tuesday, June 13, 2017

Some readers might remember this blog post:

My mom has met the minimum sum for her cohort and she has also maxed out her CPF-MA. So, guess what my reaction was when she sent me the following SMS:

"I went to XXX bank because my fixed deposit matured and they asked me to deposit for 5 years 11 months. Get 1.6% per year for first 5 years, Balance 11 months see how is performance. Get minimum 1% and maximum 2%. Principle guaranteed upon maturity but suffer penalty if withdraw before maturity. Can put or not?"


A thousand times, nooooooo!

I told her she might as well put the money in her CPF account and enjoy 2.5% interest per annum. She is allowed to withdraw the money anytime she likes too.

5 years 11 months? 1.6% per year? Penalty for early withdrawal? 

You must be kidding me.

For those who do not wish to deposit more money into their CPF accounts, they could enjoy similar returns by simply parking their funds in Singapore Savings Bonds (SSB).

Held for 10 years, the SSB yield is about 2.1% per year but if withdrawn after 5 years, the yield is about 1.6% per year.  (See: Daily SGS Prices.) Safer and no penalty for early withdrawal too.

Don't ask barbers if we need a haircut.
Also read these which are from my FB wall:

"At 55 and older, cannot top up SA anymore.
And any top up to RA cannot be withdrawn suka suka." - AK
"After 55 (after creation of CPF-RA and meeting BRS or FRS) and if unemployed, yes (the member can still do VC to his CPF and any money in CPF-OA and SA can be withdrawn anytime).
Note that this is for regular VC which puts money into OA and SA when MA is already maxed.
If MA is not maxed, most of the VC will go to the MA for older members and will be locked up.
Top Up to the RA will also be locked up.
At 55 and older, Top Up to SA is not allowed." - AK

If the CPF member is still gainfully employed after 55, withdrawal is allowed once a year.

Shirl Wong:
The rules have changed. Withdrawal not restricted to once a year if employed. I have checked this at CPF board recently.

Desmond Lee:
Yes the rules have changed. CPF officer told me last week and I did a check at their website.

Updated on OCTOBER 17, 2017.

Related posts:
1. Nobody cares more about our money.
2. Bad experience at a local bank.
3. Singapore Savings Bond.


Spur said...

Ehhhh .... how come banks still like this one?!?!?

I remember my dad-in-law previously kena conned into "long-term FD" which turned out to be yet another structured deposit. I marched with him back to the bank the next day to get it cancelled & a refund. They still had the cheek to say got few hundred dollars admin fees to deduct. I had to tell them that if they had done proper financial assessment, then this structured product was not suitable for my DIL, and if they insisted on deducting fees, I will lodge formal complain to MAS & ABS. Only then they relented.

This was in early 2008. Just a few months before the "good times" began.

Any investment need to pass 3 broad fundamental principles for a person before it can even be considered & studied further:
1. Whether there is a need for such investment/asset?
2. Whether there is ability for the person to understand/afford/hold/manage it?
3. Whether the person is willing & comfortable with it?

Hence even good bona fide investments may not be suitable for a particular person if all 3 principles are not met. E.g. Blue chips & REITs may not be suitable for someone if he already has accumulated $10M & his financial aim is simply to provide for a moderate retirement for himself & spouse.

All the more so for this lemon structured deposit. If the bank had done proper financial assessment, the staff should know.

Bad bank!! Bad bank!!

Unknown said...

She is allowed to withdraw the money anytime she likes too? can ah?

AK71 said...

Hi Spur,

Your dad in law very lucky to have you. :)

These bankers are just glorified sales people. My personal banker told me candidly that I know more than he does when it comes to investments. Alamak. -.-"

AK71 said...

Hi Kelvin,

She is allowed to withdraw money any number of times in a year from her CPF SA and OA because she is unemployed. If she is still gainfully employed, she is only allowed to make a withdrawal once a year.

pirate said...


Thanks for writing. Your blog has been a wonderful source of information for me, and I always look forward to your posts.

I have a question here. My mum is 64 years old this year and she has always been a housewife. Should I top up her CPF? She has less than 15K inside.


AK71 said...



AK71 said...

Hi pirate,

I will say that if my parents have more savings in their CPF-MA earning 4% per annum in interest, I can sleep better at night. Priority for me would be the MA. ;)

Unknown said...

Hi AK, does contribution of $7K into my mom MA get tax rebate?

Eddie said...


Sorry but where does this rule about once a year withdrawal (if employed) come from ? I attended a CPF talk and they said that as long as we meet the FRS, any excess can be withdrawn multiple times.

AK71 said...

Hi Darren,

Only the recipient will get tax rebate.

See my experience and the form:

AK71 said...

Hi Eddie,

This was communicated to us when we visited the CPFB a few years ago. It was also reported in the news.

"Currently, CPF members above 55 can withdraw balances above their cohort Minimum Sum and the Medisave Required Amount once within each birthday year, except in cases on the grounds of prolonged unemployment."

pirate said...

I am going to start topping up my mum's Medisave! :)


AK71 said...

Hi Pirate,

It is probably more practical than topping up her RA. Hopefully, she stays healthy and her MA money will grow at 6% per annum. First $30K in her CPF combined accounts will earn extra 2% interest. This is for anyone 55 or older.

If she is hospitalised in future, she will have quite a bit of money in her MA to deal with it (after Medishield Life kicks in). :)

AK71 said...

K says:
This is the scenario: I am 56 (unemployed), CPF-RA has sufficient funds for ERS, I have some funds left in both my CPF-OA and CPF-SA. I have passive income from my investments.

I would definitely continue to do VC. It is like 2 "savings account" for me at 2.5% and 4% interest. Noted that only a small part of VC will go into the CPF-SA.

Isn't this better than keeping my funds in a DBS savings account, if the interest rate at CPF-OA is better than the DBS account?

Why would you want to stop VC at 55?


AK says:
That is what I have been saying for a while now and my parents were quite happy to continue contributing to their CPF accounts in their 60s. They are both above 70 now. :)

If things remain the way they are, I will very likely continue to contribute to my CPF account beyond age 55. However, I don't know if things will remain the way they are. So, I shall decide when the time comes. ;)

AK71 said...

Alvin Chong said...
Can I use the CPF SA as a high yield savings account whereby I just withdraw the interest earned from the previous year for daily usage for the following year? Meaning to say can I live on the 4% interest earned year on year?

AK said...
You can do that from age 55 if you still have money left in your CPF-SA once your retirement sum option (BRS, FRS or ERS) is locked in your newly created CPF-RA then.

AK71 said...

Sau Yee Fong says:
To quote AK: "No longer having an earned income means he would be able to withdraw this money anytime he wants.."
I thought after setting aside the FRS at 55, CPF member can withdraw the remaining in OA/SA regardless of employment status ?

AK says:
Allowed to withdraw money any number of times in a year from CPF SA and OA if unemployed. If still gainfully employed, only allowed to make a withdrawal once a year.

AK71 said...

Shirl Wong:
The rules have changed. Withdrawal not restricted to once a year if employed. I have checked this at CPF board recently.

Desmond Lee:
Yes the rules have changed. CPF officer told me last week and I did a check at their website.

AK71 said...

Siew Mun says...
I park my funds in CPF for peace of mind and to wait when there is blood on the streets. The funds comprises of my returns and salary. I look at CPF as a high interest savings bank and like you as a bond component. I just keep both in CPF.

AK says...
I like the way you think ;)

AK71 said...

Reader says:
i don't plan to withdraw from my OA/SA when hitting 55. Instead, my plan is to use our cash savings (which is on FD @ 1%) from 50-79. thereafter, we will draw down CPF from age 80. do you know if this is allowed?

AK says:
CPF-Life (money in RA) will automatically pay out from age 70 but for money in OA and SA, you can leave it untouched for as long as you like. 😉

AK71 said...

Reader says...
Do you have a blog post about what happens to the CPF accounts between 55 and 65 if we have excess above FRS. I’m a little confused there.

At 55, if I meet the retirement sum and have balance. For the balance can I leave it in CPF to earn interest and then withdraw whenever I want with no age limit?

After 55, if we already meet FRS, can we still do a top-up to CPF?

AK says...
Read this blog. :)

AK71 said...

Reader says...
Hey, I’m 28. My CPF accumulated $120K and earned $4K interest in 2018.
Wonder if your $1M will be forced to withdraw at 55 years old beyond the ERS amount?

AK says...
If you do not need the money, you can leave the money in your CPF account.
You don't have to withdraw anything at age 55.

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