Understanding your CPF interest rate and how to use them correctly

CPF is essentially a form of social security system in Singapore that can be used for our housing, medical expenses as well as retirement needs. Surprisingly many Singaporeans are unaware of CPF interest rates and other related policies that may affect them.

We shall get a better understanding of our CPF Ordinary Account and Special Account together with the CPF interest rates that will affect them.


Before jumping into the CPF interest rates, we must first know what are the types of accounts we have in our CPF account. Our CPF account for members below the age of 55 years old is made up of:

  • Ordinary Account
  • Special Account
  • Medisave Account

For example, John has $90,000 in his Ordinary Account and $60,000 in Special Account. His CPF interest payout is computed as follows:

cpf interest rate,cpf interest rate 2021
Example on how the additional 1% is allocated in your CPF OA and SA.

In the above example, the additional CPF interest rate of 1% in Ordinary Account is capped at the first $20,000. The balance of the $70,000 in the Ordinary Account will attract the standard 2.5%.

The balance of $40,000 in the Special Account after deducting the first $20,000 in Ordinary Account will attract a total of 5%. Remember that this extra 1% is only payable to the first $60,000 across your CPF Accounts.


When utilising CPF funds for the downpayment of the property purchase, we recommend not emptying your CPF Ordinary Account. The reason is simple, as long as your mortgage interest rates are lower than CPF interest rates, it is wiser to keep your monies in your CPF as it grows faster than the interests you pay for your mortgage.

Utilising all your CPF to take a lesser mortgage loan is similar to bleeding money yearly. This is similar to you borrowing money from CPF at 2.5% interest rate to invest it in an investment that generates 1.5%. You will be losing 1% per year.

As long as the asset does not grow at a rate faster than your CPF interest rate, your CPF is not optimised or worst, depleting.


Of course, ideally, we all hope not to use our CPF at all and fund our property purchases through other means. This however is not very practical as not many of us can afford to buy a property without the help of funds from our CPF. A balance must be struck to optimise using the funds in CPF for purchasing our property while allowing some to grow in the CPF account.

cpf interest rate,cpf interest rate 2021
Common reply I get when discussing about CPF.


I do hear this a lot when touching on the topic of CPF. That is very true.

Would you like to have $300,000 or $250,000 in your CPF when you retire? I’m sure you would choose $300,000.

Remember CPF is indeed your money and it is important to maximise the use of CPF so that you have sufficient funds for your retirement. While the funds are in our CPF account, it is CPF Board’s responsibility to grow the funds. It will be your responsibility to grow it when it is out of your CPF account. So using it correctly is one way of protecting your retirement funds.

To find out more you may visit CPF Website or call CPF hotline at 1800-227-1188

Throughout my real estate career, I have helped many of my clients grow their assets and optimising CPF at the same time with the right strategies. You may contact me if you have any questions on how to optimise your CPF funds while purchasing your next property.

You may speak to your trusted agent who is fluent with CPF interest rate and policies on how to best optimise your position.

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