The Full Retirement Sum (FRS) is $205,800 for those who turn 55 in 2024. This is the amount that is meant to safeguard our retirement and one of the thresholds that determine our CPF withdrawals. While most Singaporeans reach our Full Retirement Sum only later in life, a small minority may have already accumulated their Full Retirement Sum before 55.
As of 31 December 2023, more 867,000 individuals below 55 years old had CPF balances of more than $220,000. These individuals have already hit the current FRS. If you ascribe to the 1M65, 4M65 or even 10M65 schools of thought, you may be thinking of ways to maximise your CPF savings and be on your way to reaching the FRS before the age of 55 as well.
If you have reached or are on your way to reaching this milestone you may be wondering what actually happens to your CPF contributions after you hit the Full Retirement Sum.
Read Also: How Much CPF Savings Should You Have At Every Age Group
CPF Contributions Allocations Flow To Medisave First, Then The Special Account And Finally The Ordinary Account
As working adults, we would be familiar with CPF contributions. Aside from our own employee contribution to CPF, our employers also contribute to our CPF, forming a total of up to 37% contribution to our CPF for those aged below 55 years old. This contribution varies depending on our age and income.
Employee Age (Years)
Contribution Rates (for monthly wages ≥ $750)
Employer (% of wage)
Employee (% of wage)
Total (% of wage)
55 and below
17
20
37
Above 55 to 60
15
16
31
Above 60 to 65
11.5
10.5
22
Above 65
9
7.5
16.5
Above 70
7.5
5
12.5
Source: CPF (From 1 January 2024)
However, we may not be familiar with how our CPF contributions are allocated across our various CPF accounts: MediSave Account (MA), Special Account (SA) and Ordinary Account (OA).
When we are younger, our OA receives the bulk of our CPF contributions. About 62% of our total CPF contributions go into our OA, 16% to our SA and 22% to our MediSave when we are aged 35 and below. This allocation changes, with more going to our Special and MediSave Accounts as we grow older. For those above 55, the allocations change again – with less flowing into our Special Account and more to our MediSave.
Source: CPF
For example, if the CPF contribution for a 30-year-old is $100, $21.62 will go to his MA, $16.21 will go to his SA, and $62.17 will go to his OA. If he is 55 years old, for the same $100 CPF contribution, $33.87 will go to his MA, $27.41 will go his SA, $38.72 will go to his OA. Once he turns 70, for every $100 of CPF contributions, $84 will be channelled into his MA, $8 to his SA, and $8 will go to his OA.
There is also an order of priority in how our CPF contributions are allocated: MediSave Account first, followed by Special Account and the remainder goes to the Ordinary Account.
After Reaching Full Retirement Sum (FRS) In Our Special Account, CPF Contributions Accumulate In Our Special Account
When we hit our FRS in our SA, our mandatory contributions continue to flow in our SA. This means even when we hit the FRS in our SA, any further CPF mandatory contribution that is supposed to be allocated to SA would continue to flow into our SA.
For those above 55 that hit FRS:
Age
CPF Contribution
Ordinary Account
Special Account
MediSave Account
Above 55 to 60
$100
$38.72
Hit FRS.
$27.41
$33.87
However, if we have already hit the Basic Healthcare Sum (BHS) in our MediSave Account, our MA allocation would flow into SA. For those aged 55 and above, the MA allocation will overflow into to our RA instead. However, if we have met FRS or BRS with a property that lasts up to at least age 95, the MA overflow will be credited to our OA instead. Of course, in this scenario, we can always make a transfer from our OA to RA if we wish to save up to the Enhanced Retirement Sum (ERS).
For those above 55 that hit BHS, but not FRS:
Age
CPF Contribution
Ordinary Account
Special Account
MediSave Account
Above 55 to 60
$100
$38.72
$27.41 + $33.87
Hit BHS.
$33.87
For those above 55 that hit BHS and FRS:
Age
CPF Contribution
Ordinary Account
Special Account
MediSave Account
Above 55 to 60
$100
$38.72 + $33.87
Hit FRS.
$27.41 + $33.87
Hit BHS.
$33.87
From early 2025, the Special Account will be closed for those aged 55 and above. The SA contributions would instead flow to our RA up to the prevailing FRS set for the cohort. The remaining SA savings, which are withdrawable on demand, would be transferred to the OA. We could also choose to make a voluntary transfer from our OA to the RA at any time, up to the prevailing ERS.
We Would No Longer Be Able To Make Top-Ups To Our Special Account If We Hit FRS in SA
There is a limit on how much we can top-up in our Special Account before 55: this is capped at the current Full Retirement Sum (FRS). If we are 55 and above, the maximum amount we can have in our Retirement Account is the Enhanced Retirement Sum (or 3 times the BRS, which will be increased to 4 times the BRS in 2025).
If we have already reached the FRS in our Special Account before the age of 55, we would not be able to make further top-ups to our Special Account and enjoy the tax benefits of the Retirement Sum Topping-Up Scheme (RSTU) for topping up our own account. We would also not be able to make transfers from our Ordinary Account to our Special Account.
However, if we have only reached the FRS through a combination of our OA and SA balances, we would still be able to top up our SA or transfer our OA savings to our SA to enjoy the higher 4.08% interest rate (effective from 1 January 2024 to 31 March 2024) of our SA, up to the FRS limit.
For example, the 2024 FRS is $205,800 and we have $150,000 in our SA and $60,000 in our OA. While in theory, we have exceeded the FRS, we can still make RSTU top-ups or OA-to-SA transfers.
We can choose to maximise the 4.08% interest rate and hit the FRS limit of our SA. Once we transfer $55,800 of our OA to our SA, our balances will be $205,800 in our SA and $4,200 in our OA. At this point, we will not be able to top up until the FRS is increased in the following year.
However, if we contribute via the Voluntary Contributions to our 3 CPF accounts, we can still contribute to our SA. The allocation for VC follows the mandatory allocations and the allocation to SA will continue to flow into SA. However, note that the VC is not tax deductible and subject to a cap of the CPF Annual Limit ($37,740) less the mandatory contributions.
Read Also: What’s The Maximum Amount You Can Contribute To Your CPF Accounts Each Year?
Full Retirement Sum Is Only Fixed When We Turn 55
The current FRS is $205,800 for the cohort turning 55 in 2024. This means that if you are aged below 55, FRS is a moving target; it will change yearly until you hit 55. As the FRS is increased annually, even if you hit the FRS this year, your SA balance will fall below the FRS when the FRS increases. Do note that the interest earned on FRS and any ongoing salary contributions will likely mean your SA balances continue to remain above the FRS in the following year.
For example, the FRS set in 2023 was $198,800. The interest earned on this amount was $7,952 (assuming a 4% p.a interest rate). This interest plus the FRS set aside in 2023 ($206,752) is higher than the FRS set in 2024 ($205,800).
For those of us who are aged 55 and above, the FRS cap on our SA no longer applies. Instead, we have a new milestone, the Enhanced Retirement Sum (which will be increased from 3 times the BRS to 4 times in 2025) is the maximum amount we can have in our Retirement Account.
This article was first written on 10 Jan 2022 and has been updated with the latest information.
The post What Happens To Your CPF Contributions After You Hit Full Retirement Sum (FRS)? appeared first on DollarsAndSense.sg.
