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An update on AK's CPF-SA which outperformed in 2015.

Sunday, January 3, 2016

Exactly one year ago, I shared my CPF-SA numbers, as a friend put it, to shock and awe the most cynical of readers into action. 

I think it worked as that blog post has received almost 400 FB Likes so far and also generated quite a bit of discussion.

Last month, I receive a request from a reader:

At that time, I was not sure that it would be helpful to share my CPF-SA numbers one year on but, on second thoughts, it could be a good idea. 

After all, the shock and awe generated by that blog post a year ago could have worn off by now.

So, here are the numbers:

"VC" stands for voluntary contribution. 

AK is not allowed to do Minimum Sum (MS) Top Up to his CPF-SA anymore as he has exceeded the MS.

There was a "VC refund" for excess contribution made the year before. 

I blogged about it here: 
The CPF is a national PONZI scheme.

So, I received a full year interest of $8,210.28 for my CPF-SA savings. 

The interest I receive yearly, I believe, would more than cover the planned 3% annual increase in the MS, now the FRS, from year 2018.

To find out more about the BRS, FRS and ERS, read this: 
Proposed changes to the CPF system.

All of us should try to benefit fully from the CPF system and make our CPF savings a cornerstone of our retirement funding strategy. 

To me, it is really a no brainer.

The CPF outperformed the S&P 500 and the STI in 2015. S&P 500 was flat. 

The STI declined 15% and Barclays junk bonds ETF dropped 12%.

We should always make room for a risk free and volatility free component in our investment portfolio. 

What might that be? 

I am sure you know the answer.

(If you are new to my blog, you might want to read related post number 1 below.)

Related posts:
1. A lot of money in my CPF SA is... 
2. 2016 changes to the CPF and SRS. 


Siew Mun said...

Well done AK, yes today is a happy day for me. I earned $6434.50 interest from my SA, $1893.57 from MA and $637.16 from my OA with a total of $8,965.23. Good turns. $1893.57 will be transferred to my OA as I have maxed out SA and MA.

AK71 said...

Hi Siew Mun,

Congratulations! :)

Just a mention. $1,893.57 is transferred from your MA to your OA. SA has no ceiling when it comes to "natural growth". ;p

TWF - The Why Factory said...

Indeed a good day. Many of us received free bonus as new year gift.

Mao Mao said...

Hi AK. Thanks for writing an update. The interest amount is truly amazing once the base is fat enough.

AK71 said...

Hi Komatineni,

Definitely very nice to be rewarded when we help the government to help ourselves. Of course, it is a great way to start the new year. :)

AK71 said...

Hi Mao Mao,

Thanks for the suggestion. ;)

The magic of compounding needs time to work but give it a bigger base in the early years and it gets even more magical. That was my idea when I pushed all my OA savings to my SA in the first 4 years of my working life.

This is the result. :)

vicster said...


Congrats on crossing the 200k mark in SA. I'm way behind although I have a little milestone crossing the 100k mark in SA. But I'm only a few years younger than you (sob).

Anyway, I have a dilemma on a couple of things - quite broadly in fact and need your divine advice:

1) I have a fully paid up HDB flat and have about 46k in my OA. With the property market not looking to depress any much further, but with the cooling measures still intact, my ability to purchase a second property is quite far-fetched. Should I a) transfer all of my OA to my SA or b) wait out and purchase a second property if you think the property market is worth a shot at investing?

2) Car - my car is due in Sep 2016 (10 years is up!). Should I scrap it and rely on public transport? I have a 4 yr old and one due in June. But it will incur a financial dent if I choose to get a car (whether new or second hand or extending my COE). But I will not have the intangibles that having a car will bring. But not having the car means I will have a higher shot in getting a second property.

3) VC / MS top up - I should do this early than later coz I will lose out on the compounded interest right?

Many thanks for your advice AK!

AK71 said...

Hi Vic,

All of us have different circumstances in life. We will also have different priorities and make different decisions as a result. So, it is really hard for me to give you specific advice on what to do.

I achieved what I have achieved today because I gave myself certain priorities and I made certain hard decisions. So, if you share my priorities, then, you should logically make decisions similar to mine. That's a big hint. ;)

1. Property prices. I don't know if it is a good time to buy now. I know I will look for value. You might want to search for my blog posts on "Rule of 15" and "Affordability and Value for Money". Also, remember the difference between investing and speculating.

2. Car. This is a big ticket consumption item in Singapore but it provides a high level of convenience. It is also hugely wealth destructive. You have to decide for yourself if you can plan your life around the reality of not having a car. Some manage quite well. Some don't.

3. If we have not hit the MS (now FRS) yet in our SA, doing MS Top Up will give us some income tax relief (up to $7K in contribution). Of course, we must be careful to consider our financial needs now and in the near future. What goes into the CPF-SA stays in there. Think retirement.

These are some tough questions you have to ask yourself. ;)

peacesinglove said...

hi, i'm in awe with your figures. i'm in my mid twenties and is expecting to bto soon with my bf. my oa is around 27k, sa 7k. since hdb cost is deducted from OA, do you think i should voluntarily top up my OA?

AK71 said...

Hi peace,

Before doing anything, question why you want to do it and you will know if it makes sense.

If you are topping up your OA to pay for your HDB flat, is it any different from using the cash you have on hand to pay for the flat? Why the extra step?

If you are thinking of topping up your SA as part of your retirement funding strategy, you should consider your circumstances to see if your immediate needs (e.g.s insurance, emergency fund) have been taken care of. Then, you will know if you have the green light. ;)

eruption said...

Hi AK,

Have been reading your mumbling on CPF over the past years. I have been transfering my OA to SA over past 2 years (I'm just past 36 years fyi).

Pleasantly surprised to see my statement this week that interest on my SA was near to $4000 :)

AK71 said...

Hi eruption,

What I have achieved with my savings in the CPF is not magic. It is math. ;)

I am very happy to read that it has worked for you too. :)

eruption said...

Hi AK,

Yups, "simple" maths by our nation :)

Some correction after checking my statement again:
Interest received from my SA account in 2015 was $3,366.68

I had transferred $30,000 from my OA to SA in 2015 although it was done in September & December for $20,000 of it so the interest for these was not for the entire year.

Moving forward, it is expected to have about $4000 interest on my SA in 2016 even if I take a career break in the later part of the year :) And my SA balance will hit a 6-figure sum by the end of the year

I might or might not do similar transfer again in the coming few years as will need the OA sums for housing subsequently. But I do know that I have some peace knowing that the SA sum is working hard :)

AK71 said...

Hi eruption,

And you and I both know that peace of mind is priceless. :)

Filati-Bardahl said...

Hi AK71,

Love your blog and the information on CPF SA.

Just want to check if I transfer 6k from CPF OA to SA every year for 25 years, is there a CPF SA ceiling ?

Thanks in advance

AK71 said...

Hi FB,

Once the funds in your SA hits or exceeds the Full Retirement Sum (FRS) for the year, you will no longer be allowed to do CPF OA to SA transfers. So, it depends on how soon you hit the FRS.

AK71 said...

Wong Hong Ting began regularly transferring his Central Provident Fund (CPF) savings from his Ordinary Account to his Special Account last year in order to grow his retirement funds faster.

Mr Wong, 32, told The Sunday Times: "It is a no-brainer using CPF schemes - particularly the attractive 4 per cent interest rate for the Special Account compounded annually - to grow my safety net."

The Ordinary Account offers a guaranteed annual interest rate of 2.5 per cent while the Special Account pays 4 per cent. The first $20,000 of Ordinary Account balances and $40,000 of Special Account balances earn 1 percentage point more.

From January 1 this year, members aged 55 and older have been earning up to 6 per cent for the first $30,000 in their Retirement Accounts.

Mr Wong has about $70,000 in his CPF, of which $40,000 is in his Special Account, $25,000 is in Medisave and about $5,000 is in his Ordinary Account. Every quarter, he transfers a few thousand dollars - Ordinary Account savings and cash - to his Special Account. He plans to "max out" his Special Account until it reaches the prevailing FRS and do the same with his Medisave Account, before looking at other investments.

By age 45, Mr Wong aims to have enough money in his Special Account to grow to $1 million in his Retirement Account at age 65.

Mr Wong has set aside an emergency fund that will fund a year of monthly expenses, and has $5,000 cash available for investments.

Like most CPF members, Mr Wong relies on his CPF savings to fund his home purchase, something that he now regrets as he believes he can grow his CPF funds faster by leaving them with the Board.

ST, 14 Aug 2016.

vicster said...


I have a couple of questions:

Scenario : I have 110k in SA and 50k in OA (with about 20k extra invested in equities). HDB flat fully paid up.

1) Should I transfere 30k from OA to SA leaving 20k in OA and 20k in OA invested in equities?
2) Is there a frequency limit in transferring? So for eg, I just wanna transfer 10k first then another 10k another time
3) Obviously the earlier I transfer the better since CPF calculates the interest every month? or is it daily?


AK71 said...

Hi Vicster,

Reference: Comments in another blog.

1) If you treat money in your CPF-SA as the investment bond component of your portfolio, it makes sense to do OA to SA transfer since there is no other use for your OA money.

2) You can transfer as many times in a year as you like from OA to SA as long as your SA has not hit the FRS.

3) See: MSTU and interest computation.

young said...

Hi AK,

I would like to explore placing more than the Enhanced Retirement Sum in my SA.
Was thinking of the folllowing
1) just before reaching 55 to invest the SA less the minimum $40K required
2) upon 55 topup from the OA up to the Enhanced Retirement Sum into the RA
3) after 55 liquidate the invested amount and return back to the SA
This would allow additional funds now to earn the 4% interest rates.

Appreciate your advice and comments if this is something that is workable?


AK71 said...

Hi Young,

1. I am very wary of investing with my CPF-SA money because of the risk free rate of 4% it offers. The only time I did was during the GFC when I used 10% of my SA money to invest in a Singapore focused unit trust. I sold it when its price more than quadrupled.

2. The ERS is a good idea for anyone who would like a bigger monthly payout from CPF Life from age 65.

3. There is no way to time the market accurately. Definitely, there is no way to tell if you would be able to liquidate your investment at a favourable price when you turn 55.

AK71 said...

Hi, I read from your blog that you have an amount greater than the 2016 FRS of $161K in your SA. How is that possible? Isn't amount in excess of the FRS in the SA transferred over to the OA?

Even if our CPF-SA has hit the prevailing FRS, interest earned in the SA stays in the SA and if we are gainfully employed, the SA will still receive monthly mandatory contributions. Savings in our CPF-SA can grow to be much more than the FRS.
See my numbers here:

AK71 said...

David Poh:
i really enjoyed your talk. As you were showing your SA amount i was wondering how come it can b higher than the FRS? I tot capped at $166k. How did u accumulate $200K+ in your SA?

Once our CPF-SA has hit the FRS, no Top Up is allowed. No OA to SA transfer is allowed either.

However, mandatory contribution and voluntary contribution are still allowed up to the annual contribution cap (i.e. contribution that goes into all 3 accounts) every year.

CPF-SA will also continue to grow from interest earned year after year even after it hits the FRS.

AK71 said...

Reader said...
I transferred everything from my OA to my SA. So, it doesn't matter if the economy tanks... CPF still owes me my 4%. As the saying goes: If you can't beat them, join them!

AK said...
And transferring a more meaningful amount from OA to SA earlier was what I did.
It takes a huge load off my shoulders when it comes to meeting the minimum sum or, now, the full retirement sum.

(As an investment grade bond, the CPF helps to reduce volatility of my investment portfolio too. Yes, I consider my CPF savings an integral part of my portfolio, one that gives me peace of mind.)

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