Making CPF Work for Us!

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I did not have a positive view of CPF when I first started work 20 years ago and received my first CPF account statement. Like many Singaporeans, I saw it as “forced” savings, taking away part of our pay before we even had a chance to use it. Years later, after reading up more on personal finance, my perspective changed.

I now treat CPF as a source of funding for our household financial planning, instead of something that hinders our retirement.  In fact, I now believe it is a necessary scheme especially for people who do not have the discipline to save.

One of the first things I did with our CPF, for both my husband and I, was to invest our ordinary account savings but not without learning a hard lesson first. That was some 15 years ago.  Armed with new-found knowledge on investment, I decided I could do better investing the money myself than leaving the money in the CPF to earn the single-digit interest rate. I walked into a bank near my workplace and must have made an investment consultant there very happy because I bought unit trusts he recommended - from technology to special situations funds in emerging Asian markets.

Those unit trusts were putting in double-digit returns in the past 1-2 years and there were charts to show so.  I didn't take the small print disclaimer - "Past performance is not indicative of future results" - very seriously.  Needless to say, after the dot-com bubble burst, the funds sank, halved in value and stayed in the red for quite a few years.  What I would give to have been able to earn low but stable returns during those years!

I think the pitfall of many investors, including myself, was to see CPF as "not my own money” yet. Since we cannot feel the immediate pinch of losses, nor for that matter, use any proceeds immediately, we may take on more risk with it than if the money was from our cash savings!

Actually, an interesting way to make CPF work for you, especially if you are already giving monthly allowances to your parents or in-laws, is to top up their RetirementAccounts.  It works for us because both my in-laws are already above 65 and eligible for monthly withdrawals.  Our one-time contribution to their Retirement Account works like an automatic monthly allowance, with the added benefit of income tax relief of up to $7000 per calendar year for my husband.

Besides paying for housing, we have also drawn upon our CPF savings to pay for healthcare insurance both for ourselves and our dependents.  The latter includes our two children as well as my in-laws.  This gives us peace of mind, without the need to cough out cash up front.

A few years ago, I also started to “psycho” (read “persuade”) my husband to take up the Supplementary Retirement Scheme (SRS) – a complement to the CPF scheme.  I wanted to take advantage of the income tax reliefs but my husband was reluctant at first, seeing it as money that was going to be “tied up”.  We also had this perception that the retirement age to start withdrawals was subject to revision and was therefore a “moving” target.

I did further research, which clarified that the prescribed retirement age is the one prevailing at the time of his first contribution, and is therefore fixed.  After some calculations, we agreed that the income tax savings was quite attractive.   We were also not very bothered by the 5% early withdrawal penalty or the 100% tax on any early withdrawals.  Why? Because we treat the SRS as our really long-term investment.  In fact, we have bought into value stocks using SRS, quietly earning dividends and slow capital appreciation, very much like our own stock portfolio.

Of course, there is always this common lament that we cannot depend on the CPF for our retirement.  Many of us tend to see only the amount we contribute to the CPF but may fail to register what we have used it for. What with our withdrawals for home loans, medical needs and insurance policies, it is easy for our CPF savings to run low.

So, please don’t look at your CPF savings just as your “retirement” piggy bank. See your CPF funds as one of the sources of funds in your overall asset portfolio.  As Family CFO, I work within the limits of the CPF and explore ways to optimise its returns or usage, taking into consideration our changing risk appetite.  I am considering to top up our CPF savings when we are older and nearer to the retirement age, to earn stable returns. While CPF is not liquid like cash, there are definitely ways to use it as part of overall financial planning.


  1. But i don't think payout eligibility age is fixed before one turns 55.

  2. Hi hope this clarifies: the payout age for SRS is fixed at the "prescribed retirement age prevailing at the time of first contribution", so even if retirement age is raised in future (which is very likely), it will be fixed. Of course, theoretically, one can withdraw SRS contributions at any time provided one is willing to pay for income tax and penalty charges. However, I believe for CPF itself, the "payout eligibility age" is never fixed per se.


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