A Complete Guide to Understanding CPF (2025)

CPF might seem complicated at first — but once you understand how it works, it becomes a powerful way to grow your wealth, protect your health, and secure your future.

The Central Provident Fund (CPF) is Singapore’s mandatory savings scheme, designed to help citizens and Permanent Residents achieve self-reliance across key life needs — housing, healthcare and retirement. CPF works by channelling a portion of your monthly income into three core accounts:

• Ordinary Account (OA) — mostly for housing, insurance, education and investments

• Special Account (SA) — earmarked for retirement savings and long-term investments

• MediSave Account (MA) — reserved for medical expenses and approved insurance premiums

For those aged 55 and above, a fourth account — the Retirement Account (RA) — is created to consolidate your OA and SA savings for CPF LIFE payouts.

Through savings, CPF ensures Singaporeans build a financial safety net as they progress through life.

» MORE: A complete guide to CPF in Singapore

1. Ordinary Account

Your OA is the most flexible of all CPF accounts. It supports:

Housing

Pay for HDB flats, service mortgage loans, and even private properties.

» MORE: 6 misconceptions about using your CPF for housing

Insurance

Use OA funds to pay for premiums under schemes like the Home Protection Scheme.

Education

Fund subsidised tuition fees for approved courses at local tertiary institutions.

Investment

You can invest OA savings through the CPF Investment Scheme - OA (CPFIS-OA) into instruments such as unit trusts, fixed deposits, and ETFs to potentially grow your funds.

» MORE: What a CPF account can be used for

2. Special Account

SA is designed to encourage long-term savings:

• Earns a higher interest rate to help grow your retirement funds faster.

• Funds here can also be invested via CPFIS-SA, but only into low-risk instruments like government bonds and selected funds.

• SA savings cannot be used for housing payments.

3. MediSave Account

MediSave ensures you are covered for healthcare needs:

• Can be used for hospitalisation, day surgery, and outpatient treatments.

• Pay premiums for insurance schemes such as Integrated Shield Plans.

• Once the Basic Healthcare Sum (BHS) is reached, any excess will automatically flow to your SA or RA, boosting your retirement savings.

4. Retirement Account

Created when you turn 55, the RA consolidates your SA and OA balances:

• Funds here provide payouts via CPF LIFE, which offers a choice of Basic, Standard or Escalating plans.

• Enjoys the highest interest rates among all CPF accounts to help stretch your retirement dollars.

» MORE: Apply for a CPF personal loan

CPF contributions are shared between you and your employer:

• Employee contribution: Up to 20% of monthly salary

• Employer contribution: Up to 17% of monthly salary

However, this is subject to a monthly salary ceiling of $6,800. This means any wages above this amount do not attract CPF contributions.

CPF contributions apply to:

• Ordinary Wages (OW): Monthly salary

• Additional Wages (AW): Bonuses, commissions and other irregular payments (subject to an annual cap)

Meet Mary, 26 years old and earning $4,000 a month. Since she is under 55, her CPF contributions are as follows:

» MORE: 4 reasons why you should voluntarily contribute to your children’s CPF

Earlier, we covered what each CPF account is for. When your contributions go in, they are split automatically according to your age and the allocation rates set by CPF.

The younger you are, the higher the proportion that goes into your OA (as this supports housing and education needs). As you age, more will be channelled to your SA and MA to prioritise retirement and healthcare.

» MORE: Pros and cons of keeping your savings in your CPF Special Account

There are limits to how much you can contribute:

• Monthly salary ceiling: $6,800

• Annual limit: $41,000 (inclusive of mandatory and voluntary contributions)

The CPF Annual Limit ensures you do not overcontribute. Both mandatory and voluntary contributions (VCs) count towards this cap.

If you top up your CPF voluntarily — for example, via the Retirement Sum Topping-Up Scheme (RSTU) — make sure you stay within the limit to avoid refunds or penalties.

CPF is not just for savings — it helps your money grow through interest.

» MORE: CPF investment scheme: What it is, how it works

CPF has the potential to form a robust foundation for retirement — but like any tool, its effectiveness depends on how you use it.

• Regular mandatory contributions help build your nest egg steadily throughout your working life.

• Using OA funds for housing, while necessary for many, reduces the amount available to grow in SA and RA for retirement.

• The higher interest rates on SA and RA accelerate compound growth, making it worthwhile to leave funds untouched if possible.

In short, the more you leave in CPF (especially in SA and RA), the more you stand to benefit from compounding interest when you retire.

» MORE: A complete guide to CPF Life

CPF top-ups & tax relief

Voluntary top-ups via the RSTU are a smart way to boost retirement savings while reducing tax liability.

• Up to $8,000 tax relief for topping up your own SA or RA.

• Up to $8,000 tax relief for topping up your loved ones’ SA or RA.

This strategy suits individuals with surplus cash who want to secure better retirement payouts and optimise tax savings.

Combining CPF with stocks for stability & growth

CPF can form the stable portion of a diversified investment portfolio. You can take a more aggressive stance with your cash and stocks, knowing your CPF funds offer guaranteed returns for retirement.

If you renounce your Singapore citizenship or Permanent Residency, you can withdraw your entire CPF savings.

Otherwise, your funds remain locked until your statutory retirement age. Exceptions exist for foreigners and those permanently leaving Singapore, but withdrawals must meet specific conditions.

» MORE: CPF nominations: What happens to your CPF money after you die?

CPF is not just a savings scheme — it is a long-term financial partner that supports you through home ownership, medical expenses, and retirement. By understanding how each account works and how to leverage CPF through strategies like voluntary top-ups, you can turn it into a powerful wealth-building tool.

As with any major financial decision, it pays to plan ahead. Consider topping up your SA or RA today — your future self will thank you when compound interest kicks in.