16 September 2019

How will the CPF Retirement Sums be formed upon age 55?

So we have heard about the various CPF retirement sums, i.e. Basic (BRS), Full (FRS) and Enhanced (ERS), which gets committed upon reaching age 55, and for which these will generate lifetime of payout from age 65 onwards (or deferred till age 70 if so decided).

Here's an interesting response that a friend of mine obtained from CPF Board on his queries. It provided details on how the FRS and ERS will actually be formed.

[edited extract]

Question 1: Instead of FRS or ERS, can I choose any amount that is in between, even though I have enough for ERS at age 55?

Allow us to share with you how Retirement Account (RA) will be created for you when you turn 55.

By default, the Board will create your RA when you turn 55, by setting aside the applicable Full Retirement Sum (FRS) in the RA.

The transfers of CPF accounts to make up the FRS will be made in the following accounts and sequence:
(i) funds in the Special Account (SA); and
(ii) if (i) is insufficient to set aside the FRS in full, funds in the Ordinary Account (OA) will also be transferred to your RA to make up the FRS.

The process of setting aside the FRS is automatic and applies uniformly to all members turning 55.

After the RA is created (with FRS) at 55, you can then transfer the remaining savings in your SA and/or OA of any amount and at any time to your RA, as long as it is within your topping-up limit. The topping-up limit is the maximum amount you can top up to RA.

Topping-up limit in RA is computed as follows:

Hence, if you wish to transfer an amount lesser than the topping-up limit in RA (i.e. setting aside a retirement sum between FRS and ERS), you can do so as well.

Question 2: If there is still balance in my SA after deducting the sum for RA, will it remain in the SA, or will the balance be transferred to OA?

It will remain in the SA.

For more information:
What happens to my CPF savings when I turn 55?
How much CPF savings can I withdraw from age 55?

Maximising CPF Post-55


Anonymous said...

The balance will remain in SA but after 55, such balance above the FRS that is in SA can be withdrawn at any time - it is not stuck there. But most people will leave it there as a 4% fixed deposit that can be withdrawn at any time.

Lizardo said...

That's right.

Anonymous said...

There are many other features about the CPF that you will probably need to spend some effort and time to find out but do so only when you need to use them. Otherwise it would be just for general information. And to write them all here would be to create another CPF website!

Let me share this one which is applicable to people who are 55 yo and above (like me), who would like to draw out just the yearly interest but yet wish to preserve the principal amounts in their CPF OA and SA to generate further interest.

Lets take a retiree who is 60 yo. He has met the requisite FRS amount in his RA. Lets say he has $1,000,000 in his OA and $100,000 in his SA.

The yearly interest earned in his CPF OA and SA would be as follows:

OA interest earned : $25,000
SA interest earned : $4,000

The question is how much interest can he withdraw from the CPF and at which time is the best time to withdraw without affecting his principal amounts? The answer is not so straight forward. I hazard to think that only a handful of people are familiar with the rules and who have used them to successfully withdraw the interests without affecting their principal amounts in the OA and SA.

Suffice to say, the CPF policy states that for any withdrawal (applicable to those 55 yo and above and who have met the requisite FRS amount in their RA) the following "sequence" apply:

1. The interest earned in the SA for the year (Jan to Nov) will be withdrawn first.
2. The interest earned in the OA for the year (Jan to Nov) will be withdrawn next.

Followed by;
3. Contributions for the year to the SA
4. Contributions for the year to the OA

Followed by:
5. Amount from the SA
6. Amount from the OA

And most importantly, one cannot withdraw the full year interests. In the above example, the 60 yo retiree would not be able to withdraw the full $29,000 of interests without affecting his principal amount in his SA. He could only withdraw 11 months of interest (interests earned from Jan to Nov) and he should make the withdrawal in Dec! This is because the interests earned in a month is only available for withdrawal in the month following. This means that the Dec interests would only be available in Jan of the following year. But by then, it would be considered the new principal amount for the new year!

If the retiree wasnt aware of these finer details and if he were to withdraw in Jan, the interests of $29,000 earned the year before, this is what will happen to his principal amount in his SA -- following CPF withdrawal sequence:

1. Interest earned in SA for the year = $0 (This is Jan of the new year)
2. Interest earned in OA for the year = $0 (as above)

Followed by:
3. Contributions for the year to SA = $0 (he is a retiree, so no more contribution)
4. Contributions for the year to OA = $0 (as above)

Followed by:
5. Amount from SA = $29,000 (remember he has $100,000 + $4,000 interest),
Now his SA became = $104,000 - $29,000 = $75,000

So as you can see, without knowing the finer details, the 60 yo retiree unwittingly significantly reduced his SA amount by withdrawing his "interests" in Jan!

He should make his interest withdrawal in Dec and this is what will happen -- following CPF withdrawal sequence.

1. Interest earned in SA for the year = $22,916 (Interests earned from Jan to Nov)
2. Interest earned in OA for the year = $3,667 (as above)

In this instance, he could only withdraw 11 months worth of interest ($26,583) without affecting his principal amounts in his OA and SA to generate interests in the coming year.

Now if the retiree does not have any money in his SA, then he can withdraw his full 12 months interest without affecting the principal amount in his OA.

Hope this is useful for your readers and not confuse them more. Such is the system we have in CPF.


look-good-feel-good.com said...

thanks for sharing! This is very useful info and strategy which I intend to use when I turn 55 :)

Anonymous said...

Wish to correct an error in my earlier comment.

This is for the case when the retiree withdraws the interests in Dec.

The sequence is as follows:

1. Interest earned in his SA for the year = $3,667 (Jan to Nov)
2. Interest earned in his OA for the year = $22,916 (Jan to Nov)

Total interest he can withdraw without affecting the principal sums in SA & OA = $26,583


Lizardo said...


That sure is a detailed withdrawal strategy! Thanks for sharing. Not something often talked about nor explained.

Anonymous said...

I agree with Lizardo that this is indeed very informative.
I have no idea about the sequence of withdrawal prior to this post. T
Thanks for the revelation.

Createwealth8888 said...

Before reaching 55, CPF will invite us to attend CPF 55 Talk. It is up to every CPF member to find more at this CPF Talk.

Createwealth8888 said...

There are three more Retirement Planning Roadshows to learn more about CPF in a fun and easy way with our interactive activities and more till end of this year!

Waterway Point, L1 Village Square| 28 Sep – 29 Sep
(11am – 6pm)

AMK Hub, B1 Main Atrium| 12 Oct – 13 Oct
(11am – 6pm)

Jurong Point, JP1 L1 Main Atrium| 16 Nov – 17 Nov
(11am – 6pm)

Lizardo said...


Haha, you're a CPF ambassador? Thanks for sharing.