5 things you should do with your CPF when you start working

5 things you should do with your CPF when you start working
PHOTO: Bank Bazaar

This was first published in BankBazaar.

What does starting your first full-time job entail? Finding your place at work? Earning your own keep? The first step to adulting? Besides that, you now have a CPF, which you can grow and use for home purchase, medical bills, education, investment, and retirement.

Unfortunately, many people in their 20s and even in their 30s do not take a second look at their CPF. You may hear some of them say, "It's money I cannot touch.", "It's as good as not my money.", "CPF is to leave there until I am old."

But do you know that your actions RIGHT NOW can make a huge difference to how much nest egg you would have in your CPF when you retire years later? If you want to have 10 per cent, 20 per cent, or even more than 50 per cent more money just in your CPF when you retire, you have to read this.

Let's take a look at 5 things you can do with your CPF when you start working


When you and your employer contribute to your CPF, a part of it (8 per cent of wage assuming you are under age 35) is allocated to your Medisave.

You can use your Medisave to pay for medical care, such as in-patient hospitalisation, day surgeries, treatment of chronic conditions, and rehabilitative care. Not only that, you can also use it to purchase additional private insurance coverage under the Integrated Medishield Plans.

As long as you are a Singaporean or Permanent Resident, you will be covered under MediShield Life. It is a basic health insurance plan that helps to pay for large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy for cancer.

However, the benefits of MediShield Life are calculated based on the costs in Class B2/C wards in public hospitals. It would likely not be enough if you choose to stay in Class A/B1 wards or private hospitals. You would also have to pay deductible and co-insurance.

Hence, if you prefer to stay in Class A/B1 wards or private hospitals, you can purchase additional private insurance and pay, up to a cap, via your Medisave.

Depending on your chosen private insurance, deductible and/or co-insurance would also be waived.


This is the part that most young Singaporeans neglect. You can actually transfer Ordinary Account funds you don't need to your Special Account to earn higher interest.

Here's how much interest you get for each account:

  • Ordinary account: 2.5 to 3.5 per cent per annum (p.a.)
  • Medisave and Special accounts: 4 to 5 per cent p.a.

The interest rates include an additional 1 per cent p.a. on the first $60,000 of your combined balances (with up to $20,000 from the Ordinary Account).

So, if you have set aside enough money for housing, insurance, and education in your Ordinary Account, you can transfer extra funds to your Special Account to earn more compounding interest for retirement and investment.

However, it's important to note that the transfer is irreversible.


Besides transferring funds from your Ordinary Account to your Special Account, you can also do a direct cash top-up for your Special Account.

That gives you tax relief equivalent to the amount of cash top-ups made, up to S$7,000 per calendar year.


If your parents are still working and are not tight on cash, you can consider using the monthly allowance you are planning to give them to top up their Special or Retirement Accounts.

That way, the money can grow risk-free with compounding interest and you can enjoy additional tax relief of up to $7,000 per calendar year.


You can also use your Ordinary or Special Account for investments in products like Exchange Traded Funds (ETFs), shares, bonds, and gold.

To make an investment using your CPF savings, you need to:

  • Be at least 18 years old;
  • Not be an undischarged bankrupt; and
  • Have more than $20,000 in your Ordinary Account and/or more than $40,000 in your Special Account

You can use funds from your Ordinary Account only for investments under the CPFIS-OA scheme and funds from your Special Account only for investments under CPFIS-SA.

You cannot combine them to invest in one product.

Investment profits, the interest earned from investments and dividends are not withdrawable but the good news is, they are also not taxable. You can find out more here and here.

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