What CPF Ordinary Account investment options give better returns than 2.5%?

CPF Ordinary Account (OA) Investment Options Yielding Above 2.5%

The CPF Ordinary Account (OA) currently earns a base interest rate of 2.5% per annum (CPF Board). While the OA itself offers high liquidity (fully withdrawable after age 55, subject to withdrawal rules), investing it through the CPF Investment Scheme (CPFIS-OA) allows members to seek potentially higher returns.

Investment Options and Potential Returns

Through CPFIS-OA, you can invest in various instruments, including:

• Unit Trusts and Shares: Returns are market-dependent. While some investments may yield significantly more than 2.5%, they also carry the risk of capital loss. You must manage the risk yourself.
• Singapore Government Securities (SGS) and Treasury Bills (T-bills): While T-bills are mentioned with recent cut-off yields around 3.7% (as per recent auctions), these yields are not guaranteed for OA investments and fluctuate based on market demand. The OA interest rate acts as a floor for the Special Account (SA) and Retirement Account (RA) (4% floor for RA), but the OA remains fixed at 2.5% unless you transfer funds to the RA.

Key Consideration: Transfer to Retirement Account (RA)

The most direct way to secure an interest rate higher than 2.5% on your retirement savings is by transferring OA funds to your RA. If you are aged 55 or above, you can transfer OA savings to your RA up to the Enhanced Retirement Sum (ERS) of S$426,000 (2025 figure). The RA earns 4% interest, but this transfer is a one-way, permanent move, locking the funds into CPF LIFE payouts starting from age 65. You give up the liquidity of the OA entirely.

Limits and Rules

• Investment Limit: You can invest any OA savings above S$20,000 through CPFIS-OA.
• Investment Capital: The total amount invested under CPFIS-OA cannot exceed the difference between the prevailing withdrawal limit (currently BRS/FRS) and the amount already set aside for housing/commitments.

For investments outside of transferring to RA, returns are not guaranteed and depend entirely on market performance, unlike the guaranteed 2.5% floor in the OA itself.