Major CPF Shake-Up: Singapore’s Central Provident Fund (CPF) system is set for a major transformation in 2025, with significant changes affecting members aged 55 and above. The most notable update is the phasing out of the Special Account (SA), a move expected to reshape retirement planning strategies for many Singaporeans.
Major CPF Shake-Up
| Change | Details |
|---|---|
| Closure of Special Account (SA) | Effective Jan 19, 2025, for members aged 55+ |
| SA Funds Transfer | To Retirement Account (RA) up to Full Retirement Sum (FRS); excess to Ordinary Account (OA) |
| ERS Increase | Enhanced Retirement Sum (ERS) raised to S$426,000 (4x BRS) |
| CPF Salary Ceiling | Raised to S$7,400 from Jan 1, 2025 |
| Senior Worker Contribution Rate | +1.5% CPF contribution for workers aged 55–65 |
| Matched Retirement Savings Scheme (MRSS) | Annual grant cap raised to S$2,000; age cap removed |
| Official Site | CPF Board |
The CPF Special Account closure in 2025 marks a significant milestone in Singapore’s retirement policy. While it simplifies account management post-55, it also eliminates high-yielding SA balances. However, with options like higher ERS limits, MRSS enhancements, and salary ceiling increases, CPF members have new ways to optimize retirement readiness.
What Is Happening to the CPF Special Account (SA)?
From January 19, 2025, the CPF Special Account (SA) will be closed for members aged 55 and above. This account traditionally offered higher interest (at least 4% p.a.) and was primarily used to build retirement savings.
Where Will the Money Go?
- To the Retirement Account (RA): Funds from the SA will first be transferred to the RA, up to the Full Retirement Sum (FRS). These funds will continue earning at least 4% per annum and will form the base for CPF LIFE payouts.
- To the Ordinary Account (OA): Any amount beyond the FRS will go to the OA, which earns 2.5% interest per annum. These funds can be withdrawn or invested.
What About SA Shielding?
This change effectively ends the “SA shielding” strategy, where members would temporarily invest their SA funds to shield them from being transferred to the RA. With the SA gone, this workaround is no longer possible.
The Enhanced Retirement Sum (ERS) Gets a Boost
In another big move, the ERS will increase from 3x to 4x the Basic Retirement Sum (BRS). In 2025, this means members can top up their RA to S$426,000.
Why Does This Matter?
The higher ERS allows members to receive larger monthly payouts from age 65 under CPF LIFE. For example, a male CPF member who tops up to the new ERS can expect payouts of about S$3,300 per month.
This move encourages members to save more, especially those seeking financial independence and stability in retirement.
More Major CPF Changes in 2025
CPF Monthly Salary Ceiling Raised
Starting January 1, 2025, the monthly salary ceiling for CPF contributions will increase from S$6,800 to S$7,400. This allows higher-income earners to contribute more to their CPF accounts, building larger retirement savings.
CPF Contribution Rates for Senior Workers Increase
For employees aged 55 to 65, total CPF contribution rates will go up by 1.5% in 2025. Employers and employees will both contribute more, enhancing retirement adequacy for older workers.
Expansion of the Matched Retirement Savings Scheme (MRSS)
This scheme was introduced to help Singaporeans with lower retirement savings. From January 2025:
- The annual matching grant cap will increase from S$600 to S$2,000.
- The age limit will be removed, making more people eligible.
This significantly boosts support for seniors who are trying to catch up on retirement savings.
What Should CPF Members Do Now?
1. Review Your CPF Balances
Log in to your CPF Retirement Dashboard to check your Special Account balance, how much will go to RA, and whether there will be a transfer to OA.
2. Consider Topping Up Your RA
If you can afford it, topping up to the new ERS limit can maximize your CPF LIFE monthly payouts.
3. Reassess Your Investment Strategy
With SA shielding no longer viable, you may want to explore alternatives like:
- CPF Investment Scheme (CPFIS)
- Voluntary OA/RA top-ups
- Private retirement plans
4. Speak With a Financial Advisor
Navigating CPF changes can be complex. A qualified financial planner can help you align your CPF savings with your retirement goals.
FAQs on Major CPF Shake-Up
Q1. Why is the Special Account (SA) being closed?
The CPF Board aims to simplify the CPF system and align interest rates with each account’s purpose. SA is no longer needed after age 55 since the Retirement Account (RA) takes over.
Q2. What happens to the interest rate when my funds move from SA to OA?
Funds moved to OA will earn 2.5% p.a., lower than the 4% in SA. To maintain higher returns, aim to transfer more to your RA instead.
Q3. Can I still use the SA shielding strategy?
No. After the SA is closed in 2025, there will be no opportunity for SA shielding for those turning 55 and above.
Q4. Will these changes affect CPF LIFE payouts?
Yes. If you top up to the higher ERS, you could receive up to S$3,300 monthly from age 65 onwards, depending on your gender and age at payout start.
Q5. Are these changes permanent?
As of now, these are confirmed changes for 2025. Any further reforms will be announced by the CPF Board in future policy reviews.
