Can someone breakdown CPF OA, SA and SRS contributions as well as the eligibility for the funds to be invested?

CPF is a compulsory savings and pension scheme for working Singaporeans and permanent residents.

The benefit of having your savings in CPF is the interest given.

Albert Einstein famously once said “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”

CPF is essential as it can be used to help fund retirement, healthcare, and housing needs for Singaporeans and Permanent Residents(PR).

(For Adult < age35). 20% of your income goes into your CPF. Your employers top up 17% of your salary.

For instance, if you are drawing a $1,000 your take home pay will be $800. $200 is contributed to your CPF and your employer will fork out $170, on top of your salary.

The money contributed will then split into 3 accounts,Ordinary Account(OA), Special Account(SA) and Medisave Account.

OA- 23% of monthly contributions credited here. It gives an interest rate of 2.5% You can use the money here to buy house, insurance, investment etc

SA- 6% of monthly contributions credited here. It rewards an interest rate of 4% (Not bad). It is strictly for retirement. However, anything above $40K can be withdrawn and invested.

Medisave Account- 8% of monthly contributions credited here. It is used to pay for hospitalisation or medical insurance.

Do note the percentages change for different age group.

Here’s some tips on managing your OA and SA:

Firstly it is not advisable to touch your SA as it rewards a secure 4% interest rate.

Second, you can use your OA to make long-term investment. If you are planning to get married and buy a house in the next few years, it is not advisable to use OA for investments. This is because investments carry risk and you do not want to sell it at a loss.

Do note you are required to have a min $20K before you are able to do so.

The investable sum is (Amount in OA -$20K)

For instance, if you have $50K in your OA, only $30K is available for you to invest.

Lastly, you can transfer money from OA to SA to capture higher interest rate but do note this process is irreversible. Alternatively you can set up a CPFIS that allows you to transfer funds through an agent bank to your brokerage.

All 3 accounts can be used for investment and difference is OA and SA are via wage contrbutions. You can do RSTU to SA via cash or transfering from OA to SA. VC is also another option and usually used by freelance or business owners. There is an annual cap of 37,740 to CPF accounts contribution (allocation to 3 accounts (OA, SA and MA) is based on age group). There is also a minimum sum to remain in OA (20K) and SA (40K) and the rest can be used for investment.

SRS is cash contribution to be draw down at retirement age (currently 62). There is no interest from govt for SRS and is usually used for annuity plan or investment. SRS purpose is to have tax reduction mainly which is more benefiting to certain tax bracket.

Do take note, not all types of funds are eligible for CPF investments. SRS has more choices compared to CPF OA and SA.

My version is not as comprehensive as others but is to give you a general idea if your sole purpose is for investment usage. Check out the CPF questions in Seedly and joining the IM65 telegram can also help you build the CPF knowledge.