Project CPF balances with floor interest.
Combined balance after growth
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OA (2.5%)
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SA (4%)
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Your breakdown
Updates live as you type| Account | Start | After 20 years |
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CPF is a guaranteed compounding machine
Unlike a market portfolio, CPF pays floor interest rates set by the CPF Board and backed by the government. The Ordinary Account earns at least 2.5 percent and the Special and MediSave Accounts at least 4 percent. On top of that, CPF pays an extra 1 percent on the first $60,000 of your combined balances, with up to $20,000 of that counted from the OA. Members aged 55 and over get a further 1 percent on the first $30,000. Because these rates are guaranteed and the balances are locked, the compounding is remarkably reliable. This tool projects your OA and SA forward year by year, including that extra 1 percent, so you can see the snowball without guessing at market returns.
Twenty years on a $50,000 OA and $40,000 SA
Take an OA balance of $50,000 and an SA balance of $40,000, left untouched for 20 years. In the first year the combined balance is $90,000, but the extra 1 percent applies only to the first $60,000, so it adds $600, credited to the SA. The OA grows at 2.5 percent, the SA at 4 percent plus that extra slice while it qualifies. Compounded over two decades, the gap between the two accounts widens sharply.
The $90,000 more than doubles to $187,443 with no contributions at all, purely on interest. Notice the SA, starting $10,000 below the OA, finishes more than $23,000 ahead. That is the power of the 4 percent floor against 2.5 percent over time, shown in the two lines below.
What the projection simplifies, and what it cannot promise
The model credits the extra 1 percent to the SA each year and applies the floor rates throughout, which is a fair approximation but a simplification. In practice CPF reviews rates quarterly, the OA rate is pegged to a formula linked to local bank rates subject to the 2.5 percent floor, and the SA rate tracks a longer-term bond yield, again subject to the 4 percent floor that has held for years. The extra-interest rules also have ordering quirks, and the additional 1 percent for those 55 and over is not modelled here. A second simplification is that the projection assumes no withdrawals and no contributions, so it shows pure compounding rather than your real trajectory. The headline lesson is sound and worth acting on: money in the SA compounds meaningfully faster than money in the OA. A common and costly mistake is to leave a large idle OA balance earning 2.5 percent when transferring part of it to the SA, where it would earn 4 percent, is allowed, provided you accept that the transfer is irreversible and locks the money for retirement.
Does the extra 1 percent ever stop applying?
It applies only to the first $60,000 of your combined balances at any time, so once your balances grow well past that, the bulk of your savings earns the base rate. In this example the extra 1 percent matters most in the early years and tapers in significance as the balance climbs, which is exactly what the projection captures.
Is CPF interest taxable?
No. CPF interest is entirely tax free, and Singapore has no tax on this kind of savings growth. That is part of why the effective return is so strong: a guaranteed 4 percent in the SA, untaxed, is hard to match with a comparably safe investment elsewhere.