
CPF Moves To Make Before 2021 Ends: Enjoy Tax Relief and Grow Your Retirement Savings
Would you believe it?
2021 is coming to an end in about a week.
Congratulations to all of us for making it through this tumultuous year.

As much as my year has been a mess, I decided to ensure that my financial health was not in a mess as well.
Since it’s coming to the end of the year, I began to do a yearly review of my financial growth to keep track of my progress and identify areas of improvement.
As I didn’t actively keep track of my Central Provident Fund (CPF) accounts, it was heartening to see how it has grown over time.
If you’re looking to get your finances sorted before the year ends, here are some CPF things you can look at!
TL;DR: CPF Things To Do Before the Year Ends: Reduce Your Income Tax and Grow Your Retirement Savings
Things To Do | What You Can Get |
---|---|
Cash Top-up to CPF Special Account or Retirement Account | Reduce income tax and grow retirement savings |
Transfer CPF From OA to SA | Guaranteed additional 1.5% compound interest |
Top up Your Child's CDA & SA | Dollar-to-dollar matching for CDA, unused funds will go into CPF OA when child turns 30 years old |
Giving Your Parents Allowance via CPF | Reduce income tax and grow parents' retirement savings |
Top up SRS Account | Reduce income tax and grow retirement savings |
1. Cash Top-up to CPF Special Account (SA) or Retirement Account (RA)
This is one that I practise yearly – doing cash top-ups to my CPF Special Account (SA).
While this might not be common among my peers, I believe in taking the money I can currently spare and channelling it into my CPF account as part of my retirement fund.
There are different ways you can top up your CPF to grow your CPF savings:
- Voluntary cash contribution to all three accounts (Ordinary, MediSave, and Special Accounts)
- Voluntary cash contribution to MediSave Account (MA) only
- CPF Transfers from Ordinary Account (OA) to SA or Retirement Account (RA)
- Cash top-up to SA or RA.
I personally opted for the cash top-up to my CPF SA, but you can top up your CPF RA as well.
Besides being able to reap the benefits of the 4 per cent interest that compounds annually, I can also reduce my taxable income within the respective retirement sums with this top-up:
Age | Account | Top-Up Limit | Retirement Sum 2021 |
---|---|---|---|
Below 55 years old | Special Account | Up to current Full Retirement Sum - Including nett SA savings under CPF Investment Scheme | Full Retirement Sum is currently $186,000 |
55 years old and above | Retirement Account | Up to current Enhanced Retirement Sum | Enhanced Retirement Sum is currently $279,000 |
Note that there is an annual income tax relief cap of $7,000 for self cash top-ups, and another $7,000 for cash top-ups to loved onesā accounts.
Also, if you’re wondering about the magic of compounding, here’s a sneak peek:
If you were to top up $7,000 and leave it for 30 years, this $7,000 will eventually become $21,000.
That being said, this process is irreversible and the cash that you top up can only be retrieved as CPF LIFE’s monthly payouts when we turn 65. So only put in money that you’re comfortable with keeping aside till you are old and grey.
You should also read our guide to topping up CPF before you make this decision:
CPF Rules Changes 2022
Note that this CPF cash top-up limit for tax deductions is set to change next year with the new CPF rule changes:
From 1 Jan 2022, givers will have an increasedĀ annual tax relief cap of $8,000Ā for cash top-ups to their own CPF accounts, andĀ another $8,000Ā for cash top-ups to their loved onesā accounts.
This cap is shared between theĀ Retirement Sum Topping-up (RSTU) schemeĀ and voluntary contributions to MediSave Account (MA) for employees.
The current annual tax relief cap is $7,000 for self cash top-ups, and another $7,000 for cash top-ups to loved onesā accounts.
In addition, with the new changes, tax relief for voluntary contributions to the MA will beĀ provided to the giverĀ instead of the recipient.
Changes in Top-up Limit Rules for MediSave Account
The top-up limit currently depends on two figures ā theĀ Basic Healthcare SumĀ andĀ CPF Annual Limit.
Moving forward, to simplify matters, the top-up limit for employees willĀ only depend on the Basic Healthcare Sum (BHS).
Here is an example of how this works:
Sarah currently has $50,000 in her MediSave account.
The BHS in 2021 is $63,000.
With this new rule, she will instantly know that she can contribute up to $13,000 ($63,000 ā $50,000), which is theĀ difference between her current MediSave balance and the current BHS.
Under current rules, she has to take into account the Annual Limit and also her contributions (both mandatory and voluntary).
Assuming that her total mandatory contributions for 2021 are $35,000 and that she doesnāt make any voluntary contributions, she can contribute up to $2,740 ($37,740 ā $35,000), which is the difference between the Annual Limit and her contributions for the year.
2. Transfer CPF From OA to SA
This is another strategy that can be adopted if you’d like to look for alternatives to grow your retirement savings.
It is also a risk-free approach if you’d like to grow your retirement nest egg at a slightly faster pace.
While there is no tax deduction for this transfer, this simple transfer guarantees an additional 1.5%, which would compound significantly over time.
Here’s how much difference it could make over 30 years, assuming a transfer of $30,000:
Age | Ordinary Account (2.5%) | Special Account (4%) |
---|---|---|
25 | $30,000 | $30,000 |
30 | $33,942.25 | $36,499.59 |
40 | $43,448.94 | $54,028.31 |
50 | $55,618.32 | $79,975.09 |
55 | $62,927.03 | $97,301.93 |
This method is also very convenient as individuals do not have to decide what investment product to invest in to grow their savings.
However, this transfer would mean losing the flexibility to spend these funds in investments, education, or approved insurance if kept in OA.
3. Top-up Your Child’s Child Development Account (CDA) & CPF SA
If you’re a parent, you must not miss some of the CPF hacks to give your child a financial headstart.
If you’re wondering what’s the relation between the Child Development Account (CDA) and CPF, this is because any unspent balance in your child’s CDA will be transferred to their Post-Secondary School Account (PSEA) when they turn 13 years old.
And if it remains unspent, it will then be transferred to their CPF Ordinary Account when they turn 30 years old!
What’s excellent about topping up the CDA account is that the Government will also match the amount you saved inĀ your child’s CDA, dollar-for-dollar.
A quick view of how much will be matched:
Maximum Amount You Can Deposit To Receive Dollar-For-Dollar Matching Dollar-For-Dollar Matching By Government Total (Excluding Cash Gift and CDA First Step)
1st Child $3,000 $3,000 $6,000
2nd Child $6,000 ^$6,000
(increased from $3,000)$12,000
3rd, 4th Child $9,000 $9,000 $18,000
5th Child Onwards $15,000 $15,000 $30,000
^All Singapore Citizen children who are the second child, and whose date of birth or Estimated Date of Delivery is on or after 1 Jan 2021, will be eligible to receive the higher maximum amount of dollar-for-dollar matching.*Applicable to a child born from Jan 2015.
If it’s free money, so why not just take?
If you would like to take things a step further and plan for your child’s retirement nest egg using CPF, and you up to the Full Retirement Sum’s (as of 2021) worth of cash to hand to your child…
You can top up to your, your children or your loved oneās:
- CPF SA/RA only under the Retirement Sum Topping Up Scheme (RSTU) (tax relief available).
- CPF MA only (tax-deductible* for recipient only); or
- Three CPF Accounts (non-tax deductible).
*Please note that there will be a personal income tax relief cap of $80,000. This cap applies to the total amount of all tax reliefs claimed, including any relief onĀ voluntary top-ups. For a non-self-employed person, only voluntary top-ups to MediSave Account is tax-deductible.
Here’s how much it could potentially compound to if you were to do a lump sum top-ups to their CPF Account via the Retirement Sum Topping Up Scheme (RSTU):
Your Child's CPF Special Account | |
---|---|
Initial Lump Sum Top-Up | $186,000 |
Balance after 25 years | 495,845.56 |
Balance after 55 years | $1,608,224.25 |
Your child could be a millionaire once they turn 55 years old. š¤Æ
Note: The amount that your child can receive is the current Full Retirement Sum (FRS) less net Special Account (SA) balance and net amounts withdrawn from SA for investments that are still active.
4. Giving Your Parents Allowance via CPF

This is something that I’ve heard my friends doing, especially those with parents who are not in urgent need of additional cash for their current lifestyle.
A way to ensure that your parents are well-prepared for retirement would be to top up their CPF accounts.
Through the CPF Retirement Sum Topping-Up Scheme (RSTU), you can top-up to your loved ones’ Special Account, for recipients aged 55 and below, up to the current Full Retirement Sum.
Similar to the top up to your own SA, you will get to enjoy tax relief of up to $7,000 per year as well.
This means that if you were to perform top-ups to both your own SA and your parents’ RA, you could get tax relief of up to $14,000 ($7,000 for self, $7,000 for family members).
There is also another additional option for such top-ups from 1 Jan 2021 — through the CPF Matched Retirement Savings Scheme (MRSS) — where top-ups can be done for CPF accounts that have yet to meet the Basic Retirement Sum.
The Government will match every dollar of cash top-ups made to eligible members up to an annual cap of $600.
You can read more about it here:
5. Top up SRS Account
While the Supplementary Retirement Scheme (SRS) is not directly related to CPF, it is a voluntary scheme introduced by the Government that complements the CPF.
While the CPF is an involuntary savings scheme that would provide us with our basic retirement income, the SRS is in place to help you put aside more funds for retirement.
Besides putting aside money for retirement, you get to enjoy tax relief and pay lesser income tax as well.
You just have to contribute to yourĀ SRS account by 31 December every year to qualify for tax relief.
Besides that, you can also consider investing your SRS funds to grow your money further.
Here’s a quick list of government-approved SRS investment options:
- Bonds
- ETFs
- Fixed Deposits
- Life Cover (including total and permanent disability benefits)
- Real Estate Investment TrustsĀ (REITs)
- Robo-Advisors
- Shares
- Singapore Savings Bonds
- Singa Bonds
- Single-Premium Insurance Products (recurrent single premium products, both annuity and non-annuity plans)
- Unit Trusts or Mutual Funds
Note that there is a yearly contribution cap of $15,300 for Singaporeans and PRs and $35,700 for foreigners.
If you still do not have an SRS account, you can consider opening your SRS account and top-up $1 to “lock in” your retirement age!
Things You Can Do With CPF Before the Year Ends
Many of these CPF moves would require ‘locking up’ of your money to enjoy the delayed fruits of labour.
This is the epitome of delayed gratification since most of the results can only be seen years later.
As these actions are irreversible, they would work well for funds that you know you would not be touching for the next 30 years or so.
But given the magic of compounding, these CPF moves are definitely worth considering if you are looking to grow your retirement nest egg.
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