Singapore’s CPF Special Account Closure: What to Expect in 2025

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

In January 2025, Singapore’s Central Provident Fund (CPF) will close the Special Account (SA) for members aged 55 and above. This move will transfer SA funds to members’ Retirement Accounts (RA), up to the Full Retirement Sum (FRS) for their cohort, while any excess savings will go to the Ordinary Account (OA).

The CPF, established in 1955, is a cornerstone of Singapore’s social security framework, ensuring financial preparedness for retirement, healthcare, and housing. Contributions are distributed across three accounts:

  • Ordinary Account (OA): For housing, education, and insurance needs.
  • Special Account (SA): Designed for retirement savings with a higher interest rate.
  • Medisave Account (MA): Reserved for medical expenses and insurance.

Upon turning 55, members’ CPF savings are consolidated into a new Retirement Account, which funds monthly payouts under the CPF LIFE annuity scheme. The FRS is central to this process. In 2025, the FRS will be set at S$205,800 (US$153,000), providing retirees with adequate monthly payouts for life under CPF LIFE.

For members who exceed the FRS, any additional savings will be transferred to the OA, earning a lower interest rate of 2.5 percent. However, members can voluntarily transfer excess OA savings to the RA to continue earning the higher rate of at least 4 percent.

The closure of the SA is driven by CPF’s aim to streamline accounts and maximize returns for retirement-focused savings. By transferring these savings to the RA, CPF ensures all retirement funds are consolidated into one account offering the highest interest rates available.

The closure of the SA is also part of a broader CPF policy shift aimed at creating a more resilient retirement system. These changes reflect Singapore’s evolving approach to addressing the challenges of an aging population. Further, the increase in the FRS over the years underscores the government’s efforts to ensure that CPF savings keep pace with rising living costs. This proactive adjustment helps safeguard retirees’ purchasing power and maintains the relevance of CPF payouts in meeting their needs.

Implications for workers and businesses in Singapore

For workers

The closure of the CPF Special Account brings both challenges and opportunities for workers, particularly those nearing retirement.

One of the most significant benefits is improved retirement security. By consolidating funds into the RA, members can ensure that their retirement savings grow at the highest possible interest rate.

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The closure also simplifies account management for members aged 55 and above. With fewer accounts to track, members can focus on maximizing their RA savings and planning their retirement payouts through CPF LIFE.

For businesses

The changes also have implications for businesses, particularly in terms of supporting employees during the transition. Companies may need to invest in educational resources to help employees understand how the changes affect their CPF savings. Hosting workshops, sharing informational materials, or providing access to financial advisors could ensure a smoother transition.

Additionally, a financially secure workforce can benefit businesses indirectly by boosting employee confidence and morale. Workers who feel secure about their retirement planning are likely to be more productive and engaged at work, creating a more positive workplace environment.

Preparing for the transition

As with any major policy change, understanding the implications is key to making the most of the new system. CPF members can take several steps to prepare for the SA closure:

  1. Learn about the redistribution process: Familiarize yourself with how SA funds will be transferred to the RA and OA and how this affects your overall retirement planning.
  2. Explore voluntary transfers: Consider moving excess OA funds into the RA if you have exceeded the FRS to continue earning the higher interest rate.
  3. Use available resources: Take advantage of CPF tools, such as calculators and workshops, to plan your retirement strategy.
  4. Seek Financial Advice: Consult with CPF specialists or financial advisors to tailor your retirement approach to your specific circumstances.

Conclusion: A step towards better retirement planning

The closure of CPF Special Accounts for members aged 55 and above represents a significant shift in Singapore’s retirement planning framework.

While the changes require adjustments, they ultimately strengthen the CPF system, reflecting Singapore’s commitment to its citizens’ financial security. For members, understanding these changes and taking advantage of voluntary transfers can help optimize retirement savings.

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