5 Practical Ways To Use Money From Your CPF Ordinary Account

Friday, Nov 27 2015 01:45 PM

Like it or not, all Singaporeans who are employed will have to contribute to their Central Provident Fund (CPF).

CPF consists of 3 different accounts. We have the CPF Ordinary Account (CPFOA), the CPF Special Account and Medisave. In this article, we will focus on 5 practical ways in which you can utilise money in your CPFOA.

Read Also: Why You Should Always Manage Your CPF Money


CPF wants to help you obtain your dream home…like the picture. A HDB Flat! 

Among the five ways we will be discussing, this would be the most popular choice that many Singaporeans are familiar about.

Monthly contributions made to your CPFOA can be used to pay for your monthly mortgage. This helps reduce or completely eliminate the need for home owners to fork out any additional cash outlay to service their home mortgage.

Of the 37% contributions make to CPF (20% from employees, 17% from employers), 23% goes to a person CPFOA if they are 35 or below. This means a person who earns $3,000 per month would have a monthly contribution of about $690 to their CPFOA. You can use the entire $690 to offset mortgage repayment.


Your CPFOA can be used to make investments in approved ETFs. Currently, this list includes both the SPDR STI ETF and the Nikko AM STI ETF. You can invest any amount above $20,000 in your CPFOA account.

It is worth noting that standard brokerage charges apply when you buy or sell ETF units. Typically, this would be around $18 – $25 per transaction (possibly more if you purchase in larger quantity).

In addition to that, you will incur a quarterly charge from the brokerage firm for maintaining stocks (ETFs are considered stocks) that were bought using your CPF money. This is about $2 per counter every 3 months. Some firms like DBS Vickers also charges a minimum of $5 every 3 months to maintain the account.

You have to do a little calculation to see if it is worth the effort to invest your CPFOA money. This could adds up to about $50 per year, or about 1.6% of your total investment if we assume an investment of $3,000 for the STI ETF.

Unlike cash on hand, CPFOA already gives us a basic rate of 2.5% per annum without incurring any transection cost. So we will have to weigh the pros and cons and see if we still want to invest our CPFOA money.


The CPF education scheme allows you to use your CPFOA money to pay the tuition fee for your own, your children or your spouse at approved institutions. Approved institutions include the local universities and polytechnics.

Do note that the person who used the CPF monies for education has to repay the full amount of CPF savings withdrawn along with the interest accrued.

4. Top Up Your Special Account To Earn More Interest For Retirement

We will never say no to more money for retirement

While some of us may use our CPF money to buy a property, invest in stocks or pay for education, it is important to not forget that the primary purpose of CPF is to ensure that we have enough for retirement.

CPF members who want to earn extra interest on their CPF account can consider transferring money from their Ordinary Account to their Special Account for an extra 1.5% per annum. This may not seem much, but if you compound the sum over 20 years, you would be looking at a pretty sizeable amount.


Some of us may be reluctant to spend too much money on life insurance coverage. However, you can make use of your CPFOA to help reduce the amount of life insurance coverage that you need to buy.

The Dependents’ Protection Scheme (DPS) is an opt-out life insurance scheme, which is automatically extended to eligible CPF members. The DPS provides a sum assured of $46,000 up to the age of 60. Premiums are extremely low, starting from about $36 per annum for those of the age of 34 and below.

Premiums are paid via your CPF account so no cash outlay is required on your part.

Another type of insurance worth buying is the Home Protection Scheme (HPS). This works like a decreasing term insurance plan. The purpose of it is to ensure that your home loan is taken care of in the event of any unforeseen circumstances.

Rather than to buy a separate term insurance policy to cover your home loan, why not use the HPS instead and reduce the amount of life insurance coverage you need?

Similar to the DPS, you can use your CPF money to pay for the insurance premiums of the policy so this would be a practical plan to reduce the amount of insurance expense that you incur.

BY  ON NOVEMBER 27, 2015