Why I would leave my CPF Special Account alone

Sumit Tiwari · Certified Estate Planner (EPPL) · August 2026 · four‑minute read

The Business Times recently ran a podcast that asked whether CPF members should put their guaranteed 4 per cent return at risk. Clients ask me a version of this question almost every month: should they invest their Special Account savings, or leave them where they are?

My view is that they should leave them where they are. I would not invest my own Special Account savings. If I wanted to invest CPF savings, I would use the Ordinary Account first.

The Special Account earns at least 4 per cent a year. The return is guaranteed by the Singapore Government, which holds a triple A credit rating, and the value of the account does not fall when markets fall. There are no management fees, platform fees or sales charges. You also cannot withdraw the money early, so you cannot sell at a bad time.

Advisers are not paid for recommending that you leave the Special Account alone, so it is rarely discussed.

For an investment to justify moving money out of the Special Account, it would need to return more than 4 per cent a year after fees, with enough margin to compensate you for the additional risk. A typical unit trust in Singapore may charge 1 to 1.5 per cent a year once all costs are included, which means the fund would need to earn about 5 to 5.5 per cent a year on average just to match the guaranteed return.

Markets can deliver returns like this over long periods, but with falls of 30 to 50 per cent along the way, and these falls can come at any stage of life. The Special Account keeps earning interest during a crisis, which makes it easier to leave your other investments alone when markets fall.

If you place $100,000 in the Special Account at 4 per cent, it will grow to roughly $219,000 in 20 years. An investment might grow to more than this, but it might also be worth much less at the point when you need it.

Under the CPF Investment Scheme, you can invest only Special Account savings above $40,000 and Ordinary Account savings above $20,000.

The Ordinary Account earns 2.5 per cent a year, which is a much lower hurdle. A globally diversified, low-cost portfolio held for 15 to 20 years has a reasonable prospect of returning more than 2.5 per cent, and the difference is large enough to justify the risk for money you will not need for some time.

This is the order I would follow with my own savings:

• Leave the Special Account as it is.
• If you have a long investment horizon and money in the Ordinary Account beyond what you need for housing and the near term, consider a low-cost, diversified fund rather than a few individual shares.
• Take on greater investment risk outside CPF, using cash that you can leave invested through a full market cycle.

I am cautious about any adviser whose first suggestion is to move Special Account savings into an investment product. Once fees are included, most such products are unlikely to earn more than 4 per cent.

In an earlier article, I wrote about a businessman who lost his retirement savings after trusting a business partner. An estate plan covers this money too. Your will does not cover CPF savings, so a CPF nomination is needed to decide who receives them. A will deals with your other assets, and an LPA lets someone you trust manage your affairs if you lose mental capacity.

This is an opinion piece reflecting my general views as at August 2026, prompted by The Business Times podcast "Risk or not risk your risk-free 4% CPF return". Since January 2025, members aged 55 and above no longer have a Special Account, and their savings have been transferred to the Retirement Account up to the Full Retirement Sum, with any balance moved to the Ordinary Account. CPF interest rates are reviewed periodically, account rules can change, and the figures above are simplified illustrations only. Whether investing CPF savings suits you depends on your age, balances, housing plans and circumstances, so please check the CPF Board's website for current rates and rules, and seek professional advice on your own situation.

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