What CPF means for those in their 20s

10 Dec 2015 
SOURCE: Investment Stab

CPF, in short for Central Provident Fund, is a "social security system that enables working Singapore Citizens and Permanent Residents to set aside funds for retirement. It also addresses healthcare, home ownership, family protection and asset enhancement."

This is quoted from the CPF website and as defined by CPF. While most people would think that CPF is just applicable for old people, youngsters should definitely not neglect it. This is especially true due to the magic of compounding interest. So what are the schemes that people in their 20s should know?


1. CPF Education Scheme

This scheme allows you to use your Ordinary Account (OA) savings to pay for your own, children's or spouse's subsidised tuition fees. Applications can also be made to use CPF savings to pay for your sibling's or relative's subsidised tuition fees, but will be assessed on a case-by-case basis.

However, one point to note is that this is effectively a LOAN from whoever's CPF you are using to pay for your education. Hence, it is necessary to pay back this loan with interest. The effective interest rate payable is then pegged to the OA interest rate, which is adjusted quarterly.

The student has to start repaying the loan one year after graduation or termination of studies, whichever is earlier. Repayment must be made in cash either in one lump sum or via monthly instalment over a maximum of 12 years. The minimum monthly instalment is $100 and the rate will be computed for the student based on the loan amount and repayment period.


2. CPF Investment Scheme

As we graduate and take on our first job, it is imperative to consider investing for retirement. If you are thinking of that, then this is the scheme that you do not want to miss out. This scheme allows you invest your Ordinary Account (OA) and Special Account (SA) savings in a wide range of investments.

Conditions to be met before you can adopt this scheme:

  1. are at least 18 years old;
  2. are not an undischarged bankrupt;
  3. have more than $20,000 in your OA; and/or
  4. have more than $40,000 in your SA.

You can find the range of products which you can invest in here. One of the products is Exchange Traded Funds (ETFs) which our blog had been advocating!

 Find out more here:

  1. http://investmentstab.blogspot.sg/2015/09/singapore-markets-growing-etf-choices.html
  2. http://investmentstab.blogspot.sg/2015/08/etf-funds-hedge-funds.html
  3. http://investmentstab.blogspot.sg/2015/05/how-much-can-i-invest-in-etf-using-my.html
  4. http://investmentstab.blogspot.sg/2015/04/key-take-aways-from-edge-etf-forum-2015.html

Source: https://www.cpf.gov.sg/Members/Schemes/schemes/optimising-my-cpf/cpf-investment-schemes

3. CPF Nomination Scheme

We might be thinking we are so young, filled with hope and energy. Death might be the least of a concern. This is especially so after the recent hoohah, where CPF stated that CPF funds are not covered under a will.

Here are some other information that are useful for you!


What does a CPF Nomination cover?

Covered under CPF NominationNot covered under CPF Nomination
  1. CPF savings in your Ordinary, Special, Medisave and Retirement Accounts
  2. Unused CPF LIFE premiums, if any
  3. Discounted SingTel shares
  1. Properties bought using your CPF savings
  2. Payouts from Dependants' Protection Scheme (DPS)
  3. Cash and investments held in the CPF Investment Account under the CPF Investment Scheme-Ordinary Account (CPFIS-OA)
  4. Investments held under the CPF Investment Scheme-Special Account (CPFIS-SA)

More information can be found here.


CPF is definitely not an organisation for the elderly. In fact, youngsters should harness such national scheme, especially since it affect us for the long term!

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