Why I’m Indifferent about CPF SA Change in Budget 2024

Why I’m Indifferent about CPF SA Change in Budget 2024

Written by
Demi Zhuang
Date published
February 23, 2024

The End of CPF Shielding…

For those who do not know — CPF Shielding is a hack for people to earn more interest on CPF monies by keeping most of it in the SA account earning 4% p.a., instead of OA account earning 2.5% p.a..

  • Take out money from CPF SA to invest, keep the SA account balance to it’s minimum ($40,000) before turning 55 years old.
  • When you turn 55, CPF takes your money from OA & SA to form the RA Account.
  • Cash out your investments, transferring back to CPF SA and viola~ It earns the Risk Free 4% p.a.

This is now gone…

Why I’m Indifferent

It is what it is

In life I’ve learnt that with stuff we can’t control, it’s better accepting it, move on and make plans with what is available.

Even though CPF is our money, it’s subjected to the laws of the Singapore government. It’s not as though we’re able to have a say, so make do. Make other plans.

CPF has never been the only plan in my Retirement Plans

If it was, I’d solely focus on topping up my CPF to enjoy the 4% p.a. compound effect. I wouldn’t be investing in the S&P500, in the Singapore Stock Market and more...

But it’s not. I will continue accumulating my CPF to either the BRS or FRS amount but nothing more. Who know’s if I’ll even live till that age. 🙊 IF things do not change when I reach 65 / 70, at least I’m still able receive a monthly payout from CPF Life.

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan - Morgan Housel

I’m reminded of this quote from The Psychology of Money.

I’m 28 this year and still have a pretty long horizon ahead of me. If you’re interested, read My Money Foundation , how I manage my money.

With all that said, if you’re affected.

Pick and choose from all the products available out there to earn returns above what CPF is offering. That’s the only ‘solution’.