Minister explains the purpose of CPF Special Account closure as part of long-term savings strategy
In response to concerns raised in Parliament, Manpower Minister Tan See Leng clarified that the government’s decision to close Central Provident Fund (CPF) Special Accounts (SAs) for members aged 55 and above is not about saving interest payments. Instead, the move ensures that funds meant for long-term retirement savings are transferred to the more appropriate Retirement Account (RA).
The closure, which takes effect in 2025, will transfer SA savings to the RA up to the Full Retirement Sum, with the remaining balance being redirected to the Ordinary Account (OA). While SAs offer a higher interest rate (4%), compared to the OA’s 2.5%, the RA is designed for long-term savings, and it ensures that members’ retirement funds are protected and not available for immediate withdrawal. Dr. Tan emphasized that this transition was about aligning the funds with long-term retirement goals, rather than cutting down on interest payments.
