Before we go into what can I use my CPF for, let’s ask ourselves “What is CPF designed for?” Extracted from CPF Website this is the definition/reason of having CPF.
“The Central Provident Fund (CPF) is a comprehensive social security system that enables working Singapore Citizens and Permanent Residents to set aside funds for retirement. It also addresses healthcare, home ownership, family protection and asset enhancement.”
CPF is meant for RETIREMENT. If anyone tells your that CPF is meant for you buy your home, please ask them go read the CPF website. It’s very interesting to see that the CPF website say’s the CPF will also ADDRESS home ownership. Know the distinction between “meant for” and “addresses”?
It’s important to note that though the CPF does help address the initially affordability of your home, but it is not meant for that purpose. It’s meant for RETIREMENT. Click here for my thoughts on “Why it’s not a good idea to use your CPF to purchase your home”
Now that we have gotten that out of the way. Let’s look at what are the things you can do with your CPF.
If you are less then 55 years old, your CPF is broken into 3 parts(1) Ordinary Account (2) Special Account (3) MediSave
Ordinary Account. Your CPF Ordinary Account earns you an interest of 3.5% and can be used for housing, insurance, investment and education.
Housing. It’s common knowledge that you are allowed to use your CPF to help with your downpayment / monthly payments for your house. There are limits to how much of your CPF you are allowed to use, based on a multitude of criterion. Here is a simple infographic from CPF which explains the limits of how much CPF you can use for your house. There’s a lot more to what is Valuation Limit Vs Withdrawal limits which i’ll talk more about in another article. Click here if you would like to find out more about the “Differences between Valuation Limit and Withdrawal Limits”.
Insurance. There are two kinds of insurances you pay with your CPF OA account. (1) Home Protection Scheme (2) Dependent Protection Scheme.
Home Protection Scheme: This insurances scheme covers your mortgage loan in the event of Death, Terminal Illness or Total Permanent disability. It covers you till the age of 65. This ensures that if something were to happen to you, your loved ones will still have a place to stay and the HDB mortgage loan should be fully paid for.
Dependent Protection Scheme: It is an affordable term-life insurance scheme that provides insured members and their families with some money if you were to suffer from a Terminal Illness or Total Permanent Disability. It’s an opt-out scheme, so you are automatically enrolled when you turn 21 and start contributing to your CPF. If you don’t want, you must go and tell the gahment you don’t want. It covers you till the age of 60 and the max sum assured is $46,000.
Investment. Commonly known as CPF Investment Scheme (CPFIS). CPFIS allows you to invest your CPF into the stock market and gold. There is a limit to how much of your CPF OA you are allowed to invest and the calculations are pretty complicated.
Here’s a simple tool provided by CPF to calculate how much of your CPF OA you can invest. Another easy way to find out how much you can invest in CPFIS, is to login into the CPF website and click on “My Statement”. The amount of how much you can invest to CPFIS will be clearly stated. Under “My Statement” shown above, circled in red is where you want to look to see how much you are allowed invest into CPFIS.
Education. Also known as the CPF Education Scheme. You are allowed to use your CPF to pay for your tertiary studies as long as you are planning to study in one of these approved schools. Oh wait! If you are about to go to school, you probably don’t have much CPF anyway.
Parents, you are allowed to use your CPF OA to pay for your child’s tertiary studies as long as you have sufficient money in your OA account. Once again there are many limits set by CPF on how much you can withdraw from your CPF for this purpose. So the easiest way to know how much you can withdraw is to login to CPF website and click “My Statement” and look under education as shown below.
Special Account. Your special account is as per what it’s name suggest. It’s special loh. Can see cannot touch. Ok la, with the following exception.. You can still invest some of your Special Account in Professional Managed Products. So what are these professional managed products? Here is a list of of them.
Fixed Deposits
Insurance Policies*
Unit Trusts*
Singapore Government Bonds
Singapore Government Treasury Bills
Statutory Board Bonds
Bonds Guaranteed by Singapore Government
Fund Management Accounts (you cannot invest your Special Account savings in this)
MediSave. Your MediSave allows you to pay for medical care and hospitalisation expenses. You are also allowed to buy certain medical insurances for yourself. This topic in itself is a huge topic and i’ll be dedicating an entire article on your MediSave. So stay tuned for that.
Conclusion
“Wah Mr Kua Simi, the gahment good hor? Let us use our CPF for so many things lei.” Here is Mr Kua Simi’s advise. Other then your MediSave which you can use for your medical insurances, i’ll HIGHLY DISCOURAGE anyone from using their CPF for any other purposes if you can afford it. This is mainly due to the accrued interest you have to payback. Sibei bo hua one trust me.
Education: It’s great that you are improving yourself by studying, however using your CPF is not the best idea. If really no choice, your best option is to pay it off as soon as possible. Don’t wait for the CPF repayment date, which is at 1 year from the date you graduate.
Investment: I wrote about weighing investing your money vs keeping it in your CPF in a previous article. I would not even consider invest my CPF SA as that is giving me a 5% risk free compounded interest. There’s no way i’ll be able to consistently beat that without taking some ill advised risk.
For my CPF OA account, i’ll consider touching it if i’m able to beat the 3.5% compounded interest rates. As a guide i’m looking for at least 2% above the the OA rates for me to even consider putting my hard earned money at risk. If I don’t have that, i’ll be keep my CPF locked tight where it belongs. Click here to see why you want at least 2% above your CPF OA rates before consider investing your CPF OA.
Kua Simi Property 
Leave a comment