• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Go to Expat Living Hong Kong
Get our Newsletter

Lifestyle Guide To Moving To & Living in Singapore - Expat Living HomepageLifestyle Guide To Moving To & Living in Singapore - Expat Living

Moving to Singapore and not sure where to start? Expat Living is the essential lifestyle guide to living in Singapore.

Menu
  • Living in Singapore
      • Living here
      • Neighbourhood Guides
      • Schools
      • Property
      • Work And Business
      • Finance
      • For Guys
      • Environment
        • UFIT TennisOutdoor activities – group fitness classes, tennis, cycling etc.
        • feng shui focus lucy richardsonExpat Journey: Lucy Richardson
        • Forbidden Hill fathers day gifts15 Fabulous Father’s Day Gifts and Things to Do
        • weddingTop 20 wedding venues in Singapore, for all sorts of couples
      • View all
    Close
  • Things To Do
      • Things to do
      • EL Events
      • Calendar
      • Competitions
      • Noticeboard
        • Muswell Hill comedy Pangdemonium dinner partyPangdemonium brings Muswell Hill to Singapore
        • looking for clues treasure hunt time heistWin big in the Civic District treasure hunt
        • As You Were ArtworksWhat’s on this week and beyond
        • The National Stadium - Sports Hub Best venues for concertsTheatres in Singapore plus venues for events & concerts!
      • View all
    Close
  • Kids
      • Enrichment
      • Kids Things To Do
      • Mums & Babies
      • Schools
      • Tots & Toddlers
      • Tweens & Teens
        • pre & post baby items cleaning by pramwashWhen did you last clean the baby pram?
        • Nexus International School students reading in library learning experienceLearning for the Future at Nexus
        • Forbidden Hill fathers day gifts15 Fabulous Father’s Day Gifts and Things to Do
        • fishing 3aHoliday fun and outdoor activities at this Adventure Camp
      • View all
    Close
  • Homes
      • Home Decor
      • Readers’ Homes
      • Furniture
        • feng shui focus lucy richardsonExpat Journey: Lucy Richardson
        • European bedding best mattressBest mattresses for the best sleep!
        • antique furniture singaporeAntique furniture shops – plus vintage and reproduction furniture!
        • Where to buy lamps in SingaporeWhere to buy lamps in Singapore – lights galore!
      • View all
    Close
  • Travel
      • Asia
      • Australia & New Zealand
      • Rest Of World
      • News
      • Travel Offers
        • ideas for a long weekend awayPlan ahead for that long weekend away!
        • international health insuranceProtecting your health overseas in 2022
        • Krabi Thailand beachfront villas for beach holiday in ThailandBeachfront villas in Krabi Thailand – perfect for your next beach holiday!
        • New ZealandYour mini guide to New Zealand
      • View all
    Close
  • Wine & Dine
      • Asian Cuisine
      • Western Cuisine
      • Bars & Clubs
      • Groceries & Speciality Services
      • Recipes & Classes
        • Pizza12 great places to get the best pizza in Singapore
        • Farmers market - butcher - meat shopTop butchers for good-quality meat
        • Sugarhall DaquriLatest bars in Singapore: New drinking spots!
        • M&S Meat Free NuggetsPlant-based nuggets – here’s what we think!
      • View all
    Close
  • Style & Beauty
      • Fashion
      • Hair & Beauty
      • Beauty Offers
        • hydrating products skinTried and tested: Hydrating Products for Dry Skin
        • ARIANE ZAGURY 2A Curated Fashion House for All
        • Frizz TreatmentIn need of a quick fix for frizzy hair?
        • Spray tan singaporeGet a golden glow quickly with a spray tan!
      • View all
    Close
  • Health & Fitness
      • Dental
      • Fitness
      • Medical
      • Wellness
        • injuries to hip and hamstring injuriesInjuries to hip muscles & hamstring injuries – how to treat them!
        • UFIT TennisOutdoor activities – group fitness classes, tennis, cycling etc.
        • overweightWeight gain and your health – How a GP can help
        • PainWhat is pain and how do you treat it?
      • View all
    Close
  • Shop
    • PRINT MAGAZINE
    • DIGITAL MAGAZINE
    • BOOKS
    • Close

Make CPF and Medisave work for you

10th September 2020 by Expat Living 3 Min Read

https://expatliving.sg/how-cpf-works-why-it-is-important-and-how-to-use-medisave/

Not that many countries have a government-linked pension, superannuation or national health programme – we are lucky to live in one of them. If you’re a PR or Singapore Citizen, you’ll be entitled to both CPF and Medisave. Avriowealth gives us a quick introduction and explanation of how CPF works and why it’s important to make both CPF and Medisave work for you.

How CPF works

The Central Provident Fund (CPF) is a social security system that helps Singaporeans and permanent residents set aside savings for retirement. CPF savings can also be used for housing, healthcare, insurance as well as certain investments. Both employers and employees make monthly CPF contributions.

The interest earned on CPF accounts is between 2.5% to 4% per year, with extra interest on the first $60,000 of your combined balances (capped at $20,000 for Ordinary Account (OA)) for 2020.

Within a financial plan, CPF can be earmarked as a down payment for a house, as part of the fixed income component of an asset allocation, as a pension for retirement or to help offset the costs of medical care before and during retirement.

how cpf works

Why CPF is important

CPF may be optimised for tax planning, an important part of financial planning for Singaporeans and PRs alike. Strategies to consider include the Retirement Sum Topping-up (RSTU) scheme, or rebalancing accounts between your spouses.

Are you a US taxpayer? CPF isn’t a qualified pension per the IRS; it requires annual US tax reporting. The employer’s contribution to CPF is included in annual income while the employee’s contribution is not eligible for the foreign earned income exclusion and interest earned is reported on Schedule B. Additionally, CPF needs to be reported on your FBAR – and possibly IRS form 8938, depending upon your personal circumstances. 

How to use CPF well

To help you achieve your retirement goals, one strategy may be to move funds from OA to SA to increase the rate of interest earned. Consideration has to be given to the fact that, once funds are moved into an SA account, they’re not available to fund other financial goals such as a property purchase.

While dipping into your OA account to buy property seems tempting, you may be better off using your other funds, if available, as your down payment and monthly payments. OA earns 2.5%; funds in bank accounts earn close to zero and traditional bank loans are available for around 1.5%. Using funds that pay you the highest interest rate may not be the best option – if you have a choice. By using both CPF and bank financing, you have increased your overall borrowing costs because you have to return the funds to CPF with interest and you are paying a mortgage.

Additionally, when you withdraw funds from CPF, you lose the power of compounding – earning interest on interest.

Medisave considerations

Medisave can be used to offset your out-of-pocket healthcare costs, before and during retirement. Understanding how much is available for healthcare is an integral part of your financial plan.

CPF is a wonderful tool to help Singaporeans and permanent residents achieve their financial goals, but it’s important to seek advice from your CFP professional or other trusted advisors.

For information on how you can optimise CPF, contact Michael Borchert, CFP from Avrio Wealth at mborchert@avriowealth.com.

 Avriowealth

We hope you found this interesting; click here if you’d like to read more on where to live in Singapore or explore our finance section!

 

 

Expat Living

Expat Living has everything to help you make the most of living in Singapore! We've got information on neighbourhoods, things to do and see, dining, entertainment, schools, travel, fashion, furniture, finance, health and beauty. And more!

Get the latest events, stories and special offers
sent to your inbox.

By signing up, you'll receive our weekly newsletters and offers, which you can unsubscribe to anytime.

Categories: Finance Living in Singapore

You May Also Like

feng shui focus lucy richardson

Expat Journey: Lucy Richardson

finfluencer financial scammers

Scammers and finfluencers!

sports schools in singapore students jumping sack sports activities

Discover the sports programme at this international school

Primary Sidebar

  • Competitions
  • Noticeboard
  • Subscribe
  • About
  • advertise
  • Contact
  • Privacy

© 2022 Expat Living Singapore, All Rights Reserved.