Important CPF Changes Coming in 2025: What You Need to Know

Authored by Raymond Tiah

As we approach January 2025, significant changes are coming to CPF accounts for members aged 55 and above. These changes aim to streamline savings, boost retirement funds, and enhance flexibility in managing your CPF accounts.

Closure of Special Accounts (SA) for members aged 55 and older

Starting from January 2025, CPF Special Accounts (SA) for members aged 55 and older will be closed. This is part of an ongoing effort to simplify the retirement process and ensure that members’ savings are efficiently allocated to maximise returns.

Fund Transfers to Retirement and Ordinary Accounts

Once the SA is closed, remaining balances will be transferred to the Retirement Account (RA), ensuring that members continue to benefit from higher interest rates—over 4%. This move helps to secure higher payouts during retirement.

Any remaining SA balances, after meeting the Full Retirement Sum (FRS) in the RA, will be transferred to the Ordinary Account (OA), which earns a lower interest rate of 2.5%. This ensures that funds are still accessible and can be withdrawn when needed. Members can also choose to top up their RA to the Enhanced Retirement Sum (ERS) to further boost retirement payouts or keep flexibility in the OA for investments or withdrawals.

Long-Term Savings Focus

The main goal of these changes is to better align CPF savings with long-term retirement needs, helping members grow their retirement funds at the best possible interest rates. With the RA's higher interest rate, members can achieve stronger, more reliable financial security for the future.

Home Protection Scheme (HPS) Updates

From mid-2025, changes to the Home Protection Scheme (HPS) will also come into effect. The HPS will expand its coverage to include certain pre-existing medical conditions, benefiting about 100 members annually. This update reflects the government’s commitment to making homeownership more accessible for those with health challenges.

Premium Adjustments for Pre-Existing Conditions

Members with pre-existing conditions may face slightly higher premiums under the HPS. However, this adjustment ensures the scheme remains sustainable without increasing costs for all members. It balances fair access to coverage while maintaining financial stability within the scheme.

Addressing Concerns About Premium Increases

In light of these changes, some concerns have been raised, particularly regarding the fairness of premium increases for older members. The government has reassured that over 99% of CPF members will be able to transfer their SA savings to the RA without issue, ensuring most are unaffected by these adjustments.

More Flexibility for CPF Members

One of the key benefits of these changes is the added flexibility for CPF members. Members can now choose whether to retain flexibility by keeping funds in the OA for potential withdrawals or investments, or transfer more savings into the RA for long-term growth and higher payouts. This ensures members have options to suit their financial goals, whether they are focused on immediate needs or future planning.

These upcoming changes to the CPF system reflect a stronger focus on long-term financial security and flexibility, ensuring that all members are well-positioned to enjoy their retirement years. Stay informed and plan ahead to make the most of your CPF savings.