You will be able to decide whether moving OA savings to your SA suits your plans.
Kelvin's colleague Jun Hao, 29, moved S$20,000 from his Ordinary Account to his Special Account last year after a video told him it was the easiest money he would ever make. This year Jun Hao got engaged and started looking at flats. He asked Kelvin, half joking, how to move the money back. There is no way to move it back.
That is the whole lesson in one story. An OA-to-SA transfer can grow your retirement savings faster, and it is permanent. Whether it suits you depends on what the OA money might otherwise be needed for.
The SA earns a higher interest rate than the OA, as lesson 1.2 explained. Moving money across means it earns the higher rate from then on. Over a long period, the gap compounds.
Here is the size of it with made-up figures. Using example rates of 3% for the OA and 5% for the SA, which are not the current CPF rates, S$20,000 moved to the SA earns about S$400 more in the first year. After ten years, it would be about S$32,577.89 in the SA, against about S$26,878.33 if it had stayed in the OA. The transfer adds about S$5,699.56 over the decade, with no market risk.
There can be a second effect. Only part of your OA counts towards extra interest, so moving money from the OA to the SA can let more of your balance qualify. Whether it does depends on how your accounts are spread. Check the extra interest rules on cpf.gov.sg against your own balances.
Once money is in the SA, it can't pay for a home, it can't pay tuition under the CPF Education Scheme, and it can't be invested under the wider list of OA options in the CPF Investment Scheme. It is retirement money, and it stays that way until it moves to your Retirement Account at 55.
Housing is the big one. If you buy a home later, the OA money you transferred is no longer there for the downpayment or instalments. You might end up paying more in cash, or taking a larger loan. Jun Hao's S$20,000 would have covered a large part of his CPF downpayment. Now it will earn interest until he is 55, and he will need to find the same amount in cash or a larger loan.
Education is the second. The CPF Education Scheme lets your OA pay tuition fees for approved full-time courses at local institutions, for yourself, your children, your spouse or your siblings. It works like a loan from your OA: the student repays the amount used, plus interest at the OA rate, in cash after the course ends. The scheme only works if there is OA money to lend, so a transfer reduces what is available for a child's degree or your own.
You can't transfer an unlimited amount. Transfers from the OA to the SA are allowed up to a limit linked to the Full Retirement Sum. Once your SA reaches that limit, no more can be moved. The CPF Board sets the current rule and shows your remaining room when you log in. The transfer itself doesn't earn tax relief, unlike a cash top-up, which lesson 3.2 covers.
From 55, the SA closes, and the equivalent move is from the OA into your Retirement Account. That is a separate decision, made with your retirement sum in view, and module 6 covers it.
A transfer suits people who are confident the OA money won't be needed. In practice that usually means:
you already own the home you plan to live in, and your OA still has enough left as a reserve for instalments you have no plans to upgrade, or your upgrade will be funded from the refund of the current home you don't expect to use the OA for your own or a family member's tuition you have a cash emergency fund, so you aren't relying on the OA for the instalments if you lose your job
It rarely suits people in their twenties or early thirties without a home, because the next ten years are when most people buy one. It can suit someone in their forties with a paid-up flat and an OA growing every month with nothing to spend it on.
For Kelvin, the answer for now is no. He and Mei are about to buy, and his OA will carry the downpayment and instalments for years. He wrote down the conditions under which he would look again: the flat bought, six months of instalments held in his OA as a reserve, and no upgrade planned within ten years.
Start with the next ten years and leave the interest rate for later. Where will you live, will you buy or upgrade, and is anyone likely to need your OA for study? If every honest answer points away from the OA, a transfer can grow your retirement savings with no market risk. If any answer is unsure, the OA's flexibility is worth more than the extra interest.
Write down your housing plans for the next ten years, including any upgrade, and any tuition your OA might fund. Then look at your OA balance and decide how much of it, if any, could move to the SA without touching those plans.
Write your housing plans for the next ten years and decide whether any OA money could move to the SA without affecting them.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).