Using CPF-OA as a High-Yield Savings Account

Property is really expensive in Singapore. For most, buying a home is pretty ingrained as a basic need to establish a family. So it is often the case that we would tap on our CPF as a source of cash to fund the purchase of a house.

We are poor savers, by and large, particularly at the tender ages of 20's to 30's. Being new in our career, with a salary at its lowest point, and yet filled with floords of commitments and distractions. Plus, we're probably dead silly in the way we manage our money anyway.

So we raid our CPF-OA (Ordinary Account) to help fund a huge chunk of the property purchase and continue to ride on our CPF-OA to pay the consequent installments. And we thank the gahmen for forcing us to compulsorily contribute to this. Over time, it can be a really huge chunk that we take out of our CPF-OA.

Now, there is actually no requirement to pay it back, unless we sell away our property. It remains optional to pay back what we took, plus accrued interest, otherwise. And so we never have to if we don't wish to, till the day we kaput (transit to the netherworld).

So here's an idea:

Suppose you are already past 55 years of age, and you have fully funded the Full or Enhanced Retirement Sum (FRS/ERS) into the CPF-RA (Retirement Account).  And because you have achieved FIRE, you are happily retired, drawing a passive income that is generated from a range of investment instruments. Well done! Being the studious hack that you are, you are looking for ways to manage this cash flow generation.

Suppose you generate $50,000 a year, but you only require $4,000 a month to cover monthly expenses.  Instead of keeping the remaining $46,000 for the rest of the year in cash in a bank savings account at a pathetic savings interest rate, what if you do a voluntary cash refund of CPF savings used for housing into your CPF?  The money goes into your CPF-OA where it earns 2.5% (or whatever prevailing rate). But because these are excess over the fully funded FRS/ERS, we can request to withdraw anytime, any number of times, as you're already post-55. So we can gradually withdraw $4,000 per month thereafter. Rinse and repeat.

Now, 2.5% (or whatever it may be) is pretty much risk-free and not to be scoffed at.

Is this workable?  Any catch?

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This is what the CPF website says:

You can refund any amount, capped at the full principal amount you have withdrawn for the property with the accrued interest. Please complete the Application to make cash refund of CPF savings used for property (HSD/VR) (PDF, 0.4MB) and enclose a cheque/cashier's order in favour of 'CPF Board' for the amount you want to refund. Mail both the form and the cheque/cashier’s order to: Central Provident Fund Board Housing Schemes Department Robinson Road P.O. Box 3060 Singapore 905060 Alternatively, you can deposit the cheque/cashier's order and the form at any of the CPF service centres. The refund will be made to your CPF account within 7 working days from the receipt of your cheque/cashier's order (subject to fund clearance).

I don't understand why they still go with cheque though. *shrug*