CPF Special Account Closed: Here’s How Your Retirement Account Will Replace it for Good?: The Special Account of about 1.4 million Central Provident Fund members aged 55 and above was closed on Sunday 19 Jan. In this article, we will discuss this in detail.
CPF Special Account Close
Closure of special Account for CPF members aged 55 and above and other CPFenhancements. The Special Account (SA) of approximately 1.4 million CPF members aged 55 and above closed on 19 January 2025. The closure of the SA was announced during Budget 2024.
With the closure of the SA, savings from the SA have been transferred to the Retirement Account (RA), up to the member’s cohort full Retirement Sum (FRA), where they will continue to earn the long-term interest rate from January onwards Any remaining SA savings have been transferred to their Ordinary Account (OA) where they will earn 2.5% interest per annum, and members have the flexibility to withdraw them when needed. Suppose Members would like to continue earning the higher interest rate of 4% per annum and enjoy higher retirement payouts. In that case, they can transfer these OA savings to their RA up to the current year`s Enhanced Retirement sum(ERS).
From 20 Jan. 2025, members will be notified through a hardcopy letter, as well as an email or SMS where applicable, on the closure of their SA, members can also view the amounts transferred to their RA and/or OA in their SA. Members are advised to be extra vigilant against scammers who may pose as CPF Board staff, government officials bank/ insurance agents, or claim to be appointed by the CPF or CPF Board.
Why is the CPF SA closure happening?
Both SA and RA savings earn the same long-term interest rate. However, the difference is that some SA savings can be withdrawn on demand from age 55 onwards. According to CPF, the rationale of the change is to ensure that only savings that can not be withdrawn on demand should earn the long-term interest rate, and savings that can be withdrawn on demand should planning strategies.
For CPF members nearing the age of 55, it is essential to understand how these changes might impact your retirement planning strategies.
What happens to your CPF SA Funds?
More importantly, how does this affect your money that is still coming in and how is it going to affect money that is already inside?
What will happen to the funds in our SA? Before turning 55 years of age, Singaporeans have three CPF accounts- OA, Medisave (MA) and SA. Upon turning 55 years of age, your RA is created which then becomes the main CPF account for your retirement years.
SA will be transferred to your RA if you have reached the Full Retirement Sum for your cohort, providing you with monthly payouts through CPF LIFE when you retire.
Let`s say you turn $313,000 in your SA, the balance of $100,000 will simply be transferred to your OA. If you have reached FRS and still making new CPF contributions, they will go towards your OA.
However, CPF members who have met the FRS can always choose to top up their RA up to the Enhanced Retirement Sum (ERS) – which is $426,000 for those turning 55 in 2025. But you may also choose to preserve the flexibility to withdraw your savings by leaving them in your OA albeit earning the lower interest rate of 2.5%.
How Your Retirement Account Will Replace it for Good?
SA savings will be transferred to your Retirement Account (RA), up to your Full Retirement Sum (FRS). If you have set aside your FRS, whether fully in cash or with a mixture of property and cash, any remaining SA savings will be transferred to your Ordinary Account (OA), where they remain withdrawable and will earn the short-term interest rate.
The closure of the SA is driven by CPF`s aim to streamline accounts and maximize returns for retirement-focused savings. By Transferring these savings to the RA, CPF ensures all retirement funds are consolidated into one account offering the highest interest rates available. This proactive adjustment helps safeguard retirees’ purchasing power and maintains the relevance of CPF payouts in meeting their needs.
Conclusion
In this article, we discussed The Special Account (SA) of approximately 1.4 million CPF members aged 55 and above closed on 19 January 2025. These savings will continue to earn the long-term interest rate.