CPF Shielding

Understanding CPF Shielding: Retirement Hack Before 55

All Singaporeans and Singapore Permanent Residents (PRs) make CPF contributions that their employer takes from their wages and straight into their Ordinary Accounts (OA) and Special Accounts (SA).

By the time they reach 55, they will receive their CPF Retirement Account (RA), built from both OA and SA accounts to build a basic retirement sum of S $186,000 and nothing more. 

Unfortunately, the order of deducting from SA to OA CPF accounts leaves many Singaporeans with wasted potential to grow their RA accounts to new heights that qualify for Enhanced Retirement Sums (ERS). 

This easy and reliable CPF hack will help you avoid this outcome. 

CPF Retirement Accounts: How They Work

Before we dive deeper into the CPF SA shielding hack, let’s learn more about the CPF RA. 

Upon reaching 55 years old, CPF LIFE automatically builds your retirement account. Both your OA and SA funds will create and fill up the RA account’s current full retirement sum (FRS) of S $186,000.

CPF will first take from your SA to build your RA. Once it runs out, your OA will build up the remaining CPF money to reach the FRS of S $186,000.


CPF Shielding: The Best Way to Maximize Your Retirement Funds

The RA’s primary issue is the order it consumes SA and OA funds to create itself. It will consume your SA savings first before it moves to your Ordinary Account savings. Your SA grows by 4% yearly while your OA grows only by 2.5% yearly, and this order of fund use leaves you with a huge OA amount that will only grow by 2.5% upon your retirement.

With the CPF shielding technique, you can increase the OA funds that build your RA by leaving only the smallest SA amount possible by using the latter’s cash in a low-risk, short-term CPF Investment Scheme product, then liquidating it later. 

Doing this ensures that you only leave the minimum SA maintaining balance of S $40,000 and guarantees that the RA takes much more from your OA account in the process of building itself, allowing you to maximize your year-on-year interest rate gains. Thus, we highly recommend that this hack be a part of anyone’s retirement planning by saving their CPF Special Account funds in the process.

Let’s look at a working example of this hack.


An Example Computation

If you’re turning 55 soon, you can only have S $186,000 in your RA. Currently, you have S $200,000 in your OA and S $100,000 in your SA. 

By investing your SA cash into a small short-tenor asset that leaves S $40,000 in your SA account, the RA will take this amount from your SA and start getting a bigger chunk from your OA account. This leaves you with S $54,000 in your OA, S $60,000 in your SA, and $186,000 in your RA. The S $60,000 from your SA is held in a CPFIS asset that you can liquidate in the future.


CPF Shielding: 6 Quick Steps To Get Started

Here are the steps to get started on shielding your CPF contributions for maximum growth.

1. Calculate the amount that can leave S $40,000 in your SA. The amount you take you will then invest in a CPFIS asset.

2. Invest the amount you take in a low-risk asset from any options available in the CPFIS (We’ll discuss more about these assets later).

3. Once you turn 55, wait until the CPF creates your retirement account.

4. Sell your CPFIS assets and transfer the invested money back to your CPF SA

5. If you want higher monthly payouts, you can upgrade your CPF RA to reach the sum needed for the Enhanced Retirement Sum (ERS), which increases your limit from S $186,000 to S $279,000.


CPF Savings Account Investment Asset Options

Finding the best CPFIS assets that wouldn’t decrease and put your SA amounts at risk can be challenging. To help you, here are assets that we believe will never decrease your assets. Learn more about them below.

Type Remarks
Unit Trusts (UTs) High Risk Investment
Investment-linked insurance products (ILPs) High Risk Investment
Annuities High Risk Investment that possibly pays bigger sums in the future.
Endowment 10 to 25 years tenor
Singapore Government Securities (SGS) Bonds 2, 5, 10, 15, 20, or 30 years tenor
Treasury Bills (T-bills) 6 months or 1-year tenor


Unit trusts, investment-linked insurance products, annuities, and endowments from the CPFIS are high-risk products and have a long tenor, so we wouldn’t recommend that you put your SA cash in them because preservation, not growth, is the trick’s objective. 

From this chart, we highly recommend using Singapore Government Securities because of their short 2-year tenor that will give you your cash immediately. Treasury Bills even give you a shorter waiting time to liquidate the cash thanks to their 6-12 months short tenor. Know more about how to use CPF to invest.


Businessman With Increasing Bar Graph

Is It Worth Using CPF Shielding For Retirement?

Let’s compare how your cash looks like with and without using the CPF SA scheme. 

Assumed amounts:

  • CPF SA: S $200,000
  • CPF OA: S $200,000
  • Existing Full Retirement Sum for RA: S $186,000
 N/A With CPF SA Shielding (With SA invested into a low-risk investment asset) Without CPF SA Shielding
Cash Earning 4% Per Annum CPF RA S $186,000

CPF SA S $160,000

CPF RA S $186,000

CPF SA S $14,000

Cash Earning  2.5% Per Annum CPF OA S $54,000 CPF OA S $200,000


Clearly, having more than S $300,000 earning 4% and S $54,000 earning 2.5% yearly interest is much more preferable than having less than S $200,000 earning 4% with an enormous S $200,000 earning 2.5% yearly interest without shielding your SA. Shielding your SA does work effectively, indeed!


More of Your Questions, Answered

Let’s answer some more questions for further knowledge about the CPF and this hack.

1. Are My CPF Account Interest Rates Guaranteed?

Yes, in Singapore, all CPF account interest rates are guaranteed. If you’re making deposits in other CPF accounts, here’s a list of the interest rates you’ll surely receive per year.

  • Ordinary Account: 2.5%
  • Special Account: 4%
  • Medisave Account: 4%
  • Retirement Account: 4%

2. Why Does The RA Use Up SA First Before OA?

By law, CPF’s RA must use up SA first before your OA funds. The exact reason for this mandate is never stated in any law, but it’s most likely to reduce the growth of RA accounts by creating stopgaps that you can navigate using this hack.

3. Can’t I Just Transfer My OA Funds To My SA Rather Than Performing This Hack?

Unfortunately, no. According to the law, CPF contributors cannot move their OA funds to SAs directly because Special Accounts are used for retirement, which is why it has a huge interest of 4% to aid your RA once you reach 55. However, you’re allowed to use your SAs for investments. OAs are used for housing, education, and other investments that can help you grow your CPF.

4. Can Foreign Workers Receive OA Contributions?

Workers who are employed by Singaporean companies cannot receive CPF contributions. Unfortunately, it’s most likely their Singaporean employers cannot contribute to their respective homeland’s required employer contributions.

5. Does It Cost Anything To Do The CPF SA Shielding Hack?

You won’t need to spend anything except a few fees that your investment in CPFIS using your SA account might require. You may also incur losses if you’re using other assets outside of bills and bonds. 

But, you must make sure you have big savings in your SA and OA to make the CPF hack work.

6. Can I Invest My SA Accounts On Other Assets Outside Bonds and Bills?

Yes, you can, but you will face a higher risk of losing some of the SA cash you’ll take by investing it in UTs, ILPs, annuities, and endowments. We highly advise against investing in higher-risk investments because the RA and SA’s enormous 4% guaranteed interest per year is always much better than the uncertain but higher year-on-year interest rates investment funds may offer you.

7. What Happens When I Don’t Use The SA Shielding Technique?

Your SA account will gain a guaranteed 4% interest per year while your OA account will only gain 2.5% interest per year. Upon reaching your retirement age, your SA builds the bigger chunk of your RA and only uses a smaller bit from your OA. You’re left with a higher sum in your OA that only increases 2.5% per year. 

By using the shielding technique, you can effectively maximize your retirement savings. Leaving the minimum SA amount before you reach 55 years old will force CPF to use much more of your OA than your SA in creating the RA account. In doing so, you only have a smaller sum in your OA that gains 2.5% yearly and a bigger amount inside both your RA and SA that gains 4% per year


Our Final Thoughts

The CPF SA Shielding Hack is a tried and proven method of preserving your CPF cash. If you do it correctly, you’ll see the biggest gains possible that qualify you for an ERS at any time. Maximize your CPF funds today using this technique!

  • Your CPF RA account is built from your SA funds first before your OA
  • CPF builds you an RA by the time you reach 55 years old.
  • By using the CPF SA Shielding Hack, you can get higher remaining sums on your RA and SA that earn 4% and leave a smaller OA amount that earns 2.5% yearly.

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