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How younger members can get 6% per year from the CPF?

Thursday, June 16, 2016

I have regularly blogged about how CPF members should grow our CPF savings and make it a cornerstone of our retirement funding strategy. 

I have shared my own approach and also my results here in my blog which I have been told have inspired many readers to adopt similar strategies.

Over time, some readers have written to me to share as well and I am happy to share one email here today from a regular reader:


My mother is 77 years old. Her CPF Retirement Account has about $300. I would like to top up her RA account to $60,000 to take advantage of the interest rate of first $30,000 is 6% and second $30,000 is 5%. 

I am planning like in 10 years time the growth will be sizable and relatively risk free. I will get her to nominate me as the beneficiary of her CPF savings. 

What do you think?



A screen shot of one of  my many blog posts on the CPF.

Hi SM,

I like the idea and you will also get income tax relief for up to $7K Top Up to her CPF-RA each year. Gambatte! ;)

Best wishes,

AK likes this. 

See also:
3 reasons to top up parents' CPF

Find out more about the role of the CPF and enhancements to the CPF here:

Related posts:
1. A cornerstone in retirement funding.
2. Retirement funding for our parents.
3. Parents say don't be stupid to top up SA!
4. 2016 changes to the CPF and SRS.

"If you are 55 years old or older, you will also receive an additional 1% interest on your first $30,000 in CPF savings which means you get 6% interest per annum, risk free!

"It would be a good idea for younger readers to communicate this change to their parents. If at all possible, consider topping up your parents' CPF SA or MA if they do not have that first $30,000 in their accounts." AK 


kael1n said...

have a question, in the example, what then happens to the money contributed to the RA. Is the parent able to withdraw the funds?

kael1n said...

have a question, in the example, what then happens to the funds contributed. Can the parent withdraw the funds?

AK71 said...

Hi kael,

The RA is created when we turn 55. Money from the SA and OA up to the prevailing FRS (the former Minimum Sum) is transferred to the RA where it remains till we turn 65. The RA's money goes into an annuity, the CPF Life, which will pay us a monthly income for life if we choose to activate it at age 65. That is the way we have access to our savings in our RA.

Kiki said...


I still dont understand how it works. My mother is 63 this year and has no funds in her cpf.

If i top up her ra with monthly 1k. Will she be able to withdraw monthly 1k any timr ? Thanks !

AK71 said...

Hi Kiki,

The money in the CPF-RA cannot be withdrawn in a lump sum. If you want her to be able to withdraw some of the money at any time, consider doing a voluntary contribution to her CPF account instead. The money will be split between the OA, SA and MA but because of her age, two thirds of the money will go into her CPF-MA which she will not be able to withdraw.

Kiki said...


Thanks for your reply. Doesnt she need to keep to a min sum which she does not have ? If i top up her oa instead of ra , does it mean she can withdraw oa and the sa anytime ? Ra is only monthly fixed amt after 65.but will earn higher interest

AK71 said...

Hi Kiki,

Ah, yes. The minimum sum. This has to be set aside at age 55. Since she is past that age, you might want to check with the CPF Board on how contribution at her age now will be managed. Share with us their reply, ok? ;)

The idea in this blog post is to lock the money into the elderly parent's CPF-RA to earn higher interest of 6% for the first $30K and 5% for the next $30K. Anything more will earn 4%. The CPF-RA could then pay a monthly income to the member from age 65 if the option is chosen.

KW said...

Hi AK,

Will lke to share my story.
My father is 87 and I transferred $30K from my OA to his RA (after satisfying many conditions)
CPF had replied me that my father will be placed under Retirement Sum Scheme (RSS) and can activate the monthly payout at once.
With $30K in the RA, my father will recevied about $600 per month for 5 years or when the fund is fully withdrawn.

Do check it out with CPF on your own situation.

My intention is to ensure my father have some money in the event some unlucky things happen to me.

With the policy to transfer monies to our loved ones, it really helps out in my situation.

RayNg said...

Should also include this post to "Related Articles".

My parents say don't be stupid to top up my CPF-SA.
Saturday, January 3, 2015

AK71 said...

Hi KW,

Thanks for sharing your experience with us. I am sure it is very helpful to some of us here. :)

Yes, for the elderly, the Retirement Sum Scheme (RSS) applies. This is the case for my uncle too when he chose to receive a monthly sum from his CPF savings two years ago.

AK71 said...

Hi Ray,

Thanks for the suggestion. It has been added. ;)

MaTaKazer said...

This is pretty neat and can be treated as a 10Y govt bond, getting roughly 5.5% PA on 60k.

The only downside is that the invested amount cannot be liquidize in one shot, only in a form of annuity. That being said, if the account holder should meet a mishap and dies, it will be paid out to the beneficiary in cold hard cash.

Overall, I think it's really a good deal for someone who wants to have some cash for their elderly parents when they reach 65.

I would like to clear some doubts that I have though.
1: Can a member withdraw any excess above the FRS should he/she reaches the required FRS after 55? It it is strictly a one time decision during 55?

AK71 said...

Hi MaTaKrazer,

At age 55, we can withdraw everything in excess of the FRS if we choose to. If we do not have enough money to hit the FRS and if we have a property we could pledge, we could go with the BRS (half of the FRS).

We could also choose to leave any excess funds above the FRS in our CPF account to continue earning interest in the OA or even the SA (which is possible if money in our SA exceeds the FRS). In such a case, after 55, if still employed, we are allowed one withdrawal a year. If no longer employed, we can make withdrawal any number of times a year.

Kiki said...


I post the question to cpf but they have yet to advise. Will update again :)

Kiki said...

Cpf advised she did not set aside the Full Retirement Sum (FRS) in her Retirement Account (RA), upon withdrawal, around 50% of the withdrawal amount will be transferred to her RA to set aside the shortfall.

AK71 said...

Hi Kiki,

Ah, that makes sense. So, she would have some of the money transferred to her RA from which she could get a monthly payout.

Kiki said...

Hi ak

As quoted

Voluntary Contribution (VC)

If you were to make a Voluntary Contribution (VC) to her three CFP Accounts, she can still apply to withdraw her Ordinary and Special Account savings. As she did not set aside the Full Retirement Sum (FRS) in her Retirement Account (RA), upon withdrawal, around 50% of the withdrawal amount will be transferred to her RA to set aside the shortfall.


Monies in the MA cannot be withdrawn in cash as they are meant for your personal or immediate family's hospitalisation, day surgery and certain outpatient expenses.​


Retirement Sum Topping-up Scheme (RSTP)

If you were to make a top-up of $1,000 to your mother’s Retirement Account, she apply to start receiving monthly payouts from her payout eligible age of 64. For members who have lower balances, can receive a floor payout rate of $250. It will be paid to your mother until her RA savings are exhausted

AK71 said...

Hi Kiki,

Thanks for sharing the reply in detail.

I am sure it will be helpful to other readers in a similar situation. :)

ck said...


After 55 years old, if one still has money in OA/SA after deducting the prevailing FRS, can one uses this money in the OA/SA to buy shares listed in SGX, or other securities?
Thanks in advance

Regards, El

AK71 said...

Hi ck,

I think it would be easier to simply withdraw whatever is above in the FRS in this case to purchase securities. :)

AK71 said...

Saw ur post today and told my mum she could do the same and earn good interest while being secure and able to draw out the money anytime.

She told me. If even the Lee family who are so rich are fighting over money, the money inside CPF is not secure! Better don't believe the government so much.

I believe in the CPF system a lot but is unable to convince my mum..

she won 4D the other day, gave me $100 and I topped up my SA with it..

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