In January 2025, Singapore Central Provident Fund (CPF) to close Special Account (SA) for elderly members 55 and over. The move will transfer SA funds into members’ Retirement Accounts (RA) up to their group’s Full Retirement Sum (FRS), with any excess savings going into the Ordinary Account (OA).

Established in 1955, CPF is the cornerstone of Singapore’s social security framework and ensures financial preparedness for retirement, healthcare and housing. Contributions are distributed to 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.

After turning 55, members’ CPF savings are pooled into a new Retirement Account, which funds monthly payments under the CPF LIFE annuity plan. FRS is at the center of this process. In 2025, the FRS will be set at S$205,800 (US$153,000), providing retirees with adequate monthly payments for life under CPF LIFE.

For members exceeding the FRS, any additional savings will be transferred to AE, resulting in a lower interest rate of 2.5 per cent. However, members can voluntarily transfer excess AE savings to the RA to continue earning a higher rate of at least 4 percent.

The SA closure is being driven by the CPF’s goal of streamlining accounts and maximizing returns on retirement-focused savings. By transferring these savings to the RA, the CPF ensures that all retirement funds are pooled into a single account offering the highest interest rates available.

SA’s closure is also part of a wider CPF policy change aimed at creating a more resilient pension system. These changes reflect Singapore’s evolving approach to addressing the challenges of an aging population. Additionally, the increase in FRS over the years underscores the government’s efforts to ensure CPF savings keep pace with rising costs of living. This proactive arrangement helps preserve the purchasing power of retirees and ensures that CPF payments remain valid in meeting their needs.

Implications for workers and businesses in Singapore

for workers

The closure of the CPF Special Account brings with it both challenges and opportunities for workers, especially those approaching retirement.

One of the most important benefits is improved retirement security. By pooling funds in RA, members can ensure their retirement savings grow at the highest possible interest rate.

Find Business Support

The closure also simplifies account management for members aged 55 and over. With fewer accounts to keep track of, members can focus on maximizing their RA savings and planning their retirement benefits 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 can make for a smoother transition.

Additionally, a financially secure workforce can indirectly benefit businesses by increasing employee confidence and morale. Workers who feel secure about their retirement plans 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 getting the most out of the new system. CPF members can take several steps to prepare for SA closure:

1. Learn about the redeployment process: Learn how to transfer SA funds to RA and OA and how this will affect your overall retirement plan.
2. Explore voluntary transfers: If you have exceeded FRS to continue earning a higher interest rate, consider moving excess OA funds to RA.
3. Use available resources: Take advantage of CPF tools like calculators and workshops to plan your retirement strategy.
4. Get Financial Advice: Consult CPF experts or financial advisors to tailor your approach to retirement 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 change to Singapore’s retirement planning framework.

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