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Smart-hack your CPF

3 min. read

Smart-hack your CPF

What if we told you... we know of a product offering interest rates of 2.5% to 6% per year... risk-free?

Sounds too good to be true? Well, not this time. This product really exists... and it’s none other than your Central Provident Fund (CPF) savings.

You probably already knew this. Unlike other savings or investment products, CPF interest is risk-free. CPF savings in your Ordinary Account earn guaranteed interest of 2.5% a year, while savings in your Special Account and Medisave Account earn 4% annually. You’ll also earn an additional 1% interest on the first $60,000 of your combined CPF balances (with up to $20,000 from the Ordinary Account).

And what’s more, beyond your 20% monthly contribution, there are ways you can smart hack your CPF to get more. Here are some tips to get you started.

1. Top up your CPF Special Account for risk-free interest

Did you know you can get tax relief on up to $7,000 of cash top-ups to your CPF Special Account each year? What’s more, the money you put in will earn interest of up to 5% per year. Of course, you don’t have to max it all out in your first year.

Start small and top up your Special Account in amounts that you find manageable and comfortable.

And remember - interest is compounded annually, so the earlier you start, the better.

2. Get tax relief from topping up your parents’ Special/Retirement Accounts

If you’re already supporting your parents financially through cash, why not contribute to their CPF accounts too?

This will allow your parents to earn attractive risk-free CPF interest of up to 6% and build up their retirement savings. Up to $7,000 of cash top-ups to your parents’ Special Account / Retirement Account is also eligible for tax relief. This is over and above the $7,000 tax relief you can get for topping up your own Special Account.

3. Top-up your CPF in January instead of December


Did you know you get to earn more interest by topping up earlier in the year? So top up sooner, rather than later! If you top up every year in January instead of December, you could earn around 20% more interest on your CPF savings in just 10 years.

4. Top-up in small amounts


Find it difficult to part with a few thousand at one go? To make saving more manageable, top-up your CPF a little at a time. Use GIRO to automatically transfer a small amount of your monthly salary to your CPF. This takes away the sting a bit, compared to adding a huge lump sum at one go.

Remember, saving up is a long-term journey and CPF returns are both safe and hard to beat. Ready to take action? Find out how to top up your CPF here.

Last updated on 13 Mar 2023