A comprehensive guide to CPF for newly approved Permanent Residents

Congratulations on your Permanent Residency (PR) status! 

As a PR, you are now part of Singapore's Central Provident Fund (CPF), one of the best-managed social security schemes in Asia. This social security system is designed to help you build deep roots in your new home, from securing your dream home to ensuring your healthcare needs. 

While your monthly payroll structure will change slightly, this transition can enhance your financial security. One of the biggest advantages is the additional contribution from your employer, which acts as an immediate boost to your total compensation. If you were already receiving a private pension allowance or cash equivalent prior to your status change, this transition simply formalises those benefits into a regulated, interest-bearing system. 

CPF is more than just pension contributions, but a thoughtfully structured support system built to grow right alongside your career – whether it’s securing a home to call your own, ensuring your family’s healthcare is always protected, or building a worry-free retirement.

Read to find out more about CPF basics, your contribution rates, and what will happen to your CPF account if you renounce your PR status.

What is CPF?

The CPF (Central Provident Fund) is a comprehensive social security plan that aims to help its members (both citizens and permanent residents) meet their retirement, housing and healthcare needs. You are only able to withdraw part of these savings at the age of 55 and later. 

Your CPF contributions are automatically distributed into specialised accounts designed to support your life milestones in Singapore:

• Ordinary Account (OA): You can use these funds to pay for your home mortgage or certain insurance and investment schemes.
• MediSave Account (MA): Your healthcare safety net, helping cover hospitalisation expenses and approved medical insurance premiums.
• Special Account (SA) & Retirement Account (RA): The SA is dedicated to your retirement, earning a higher interest rate while you are under 55.

When you turn 55, an RA will be created to provide you with monthly payouts in your later years. At this point, your SA will be closed. Your SA savings (followed by your OA savings, if needed) will be transferred to your RA up to your Full Retirement Sum. Any remaining SA balance will be moved to your OA, where it remains withdrawable. For a detailed breakdown of this transition, please refer to What is CPF SA closure?.

Similar to a regular savings account, these contributions earn risk-free interest.

Over time, this accumulation of wealth allows CPF to fulfil its intended mission of helping its citizens and residents meet their retirement and financial needs. 

How much CPF contributions do new Singapore PRs have to make?

There are two main components to CPF contributions: from employers and from employees. 

Singaporeans and PRs who earn above S$50 a month must receive CPF contributions from their employers. If your monthly income exceeds S$500 a month, you will have to contribute your share (i.e employees' contribution) of CPF contributions.

As a new PR, your contribution to CPF begins on the date of your status approval, the one indicated in your Entry Permit. Understanding any change to the monthly salary is a big deal, to help you settle into your new status without feeling a sudden pinch, the government offers a "graduated rate" (G) approach during your first two years as a PR, where you (and your employers) will pay a lower contribution rate. 

From the third anniversary of your PR status, both you and your employer will have to contribute the full amount, known as full rates (F), which is the same as what Singapore citizens need to contribute.

Understanding graduated and full rates for PRs 

While the “graduated” approach is designed to give you a gentle start, you actually have some flexibility in how you and your employer contribute during those first two years. To keep it simple, here are the three paths you can take:

1. Graduated employer & graduated employee (G/G): Both employer and employee contribute at graduated rates. This is the default option. 
2. Full employer & graduated employee (F/G): Employer contributes at full rate, while employee contributes at graduated rate.
3. Full employer & full employee (F/F): Both employer and employee contribute at full rate.

If you feel ready to grow your savings faster, the second and third options are available to you. Since these involve your employer's contributions too, you will need to make a joint application with them to opt-in for the higher rates during your first two years. It’s a great conversation to have if you’re looking to build your nest egg as quickly as possible.

Below is a breakdown of CPF contribution rates for new PRs during the adjustment period.

Transition to full rates from the third year

From the third year of your PR status onwards, both you and your employer will contribute at the full rates. These rates are determined by your age group and are subject to periodic adjustments.

If you’re looking for even more ways to secure your future, you don't have to rely solely on your monthly payroll. You also have the option to You can also voluntarily top up your CPF through the Retirement Sum Top-Up Scheme (RSTU). 

Plus, there's a nice perk for you: Tax relief. Any voluntary top-ups you make can reduce your taxable income, making it a smart way to save for the future while being efficient with your finances today.

Read more: Should a new PR make voluntary contributions to CPF accounts?

What is CPF LIFE, and should it be part of your retirement plan?

What makes CPF so attractive is the combination of risk-free guaranteed interest, government grants, and tax relief. These perks, along with flexibility in how you invest, have made CPF a favourite cornerstone for many people’s retirement plans here.

The goal of all these savings is a scheme called CPF LIFE. It’s essentially a national annuity plan that gives you monthly payouts for the rest of your life, starting from age 65 (though you can choose to start as late as 70 for higher payouts). 

Here are three features about CPF LIFE you need to know:

• Automatic enrolment: As a PR, you’ll be automatically included in CPF LIFE when you start your payouts if you were born in 1958 or later and have at least S$60,000 in your retirement savings.
• Tailored to you: The exact amount you receive every month depends on how much you’ve accumulated in your RA by age 65 and which of the three CPF LIFE plans you choose.
• Peace of mind: Because it’s an annuity, you never have to worry about outliving your savings. Even if your account balance eventually hits zero, the payouts continue for life.

If you envision CPF LIFE being a primary source of income in your golden years, it helps to start with the end in mind. By understanding the contribution options we discussed earlier, you can set specific goals today to ensure your monthly payouts comfortably sustain the lifestyle you want later.

Use the CPF Retirement Payout Planner to see what your future payouts might look like based on your current salary.

Grow your CPF retirement savings

Since CPF is such a strong foundation, many look for ways to give their balances an extra boost. If you want to grow your nest egg even faster, you have two main paths:

• Simple cash top-ups: As we mentioned earlier, you can make voluntary cash contributions (RSTU) to your accounts. It’s a low-effort way to increase your future payouts and enjoy some tax relief along the way. 
• The CPF Investment Scheme (CPFIS): If you’re comfortable taking on a bit more risk for potentially higher returns, you can explore the CPF Investment Scheme. While CPF’s guaranteed interest is already great, CPFIS allows you to invest a portion of your savings in things like shares, gold, or unit trusts. It’s a popular choice for those who want to be more hands-on in making their money work even harder.

Here are the key requirements you’ll need to meet before you can start investing through the CPF Investment Scheme (CPFIS):

To ensure you always have a solid foundation for housing and retirement, you can only invest the amount above these thresholds:

• Ordinary Account (OA): You must maintain at least S$20,000.
• Special Account (SA): You must maintain at least S$40,000.

To get your investments moving, there are some specific steps needed:

• Complete the SAQ: Take a quick online Self-Awareness Questionnaire. It’s to help you understand the risks and how the scheme works.
• For OA investments: Open a CPF Investment Account with one of the three agent banks: DBS, OCBC, or UOB. (Note: You can only have one CPF Investment Account at a time).
• For SA investments: Unlike the OA, your Special Account doesn’t require a separate bank account. You can invest your SA funds directly through CPF-approved product providers.

What happens to your CPF if you plan to leave Singapore?

Being a PR offers great stability, but life can take you in many directions. It’s good to know how your savings travel with you.

1. Working or living abroad (but keeping your PR status)

If you move overseas but maintain your status, your CPF account stays active and continues to earn risk-free interest. (Note: This only applies as long as your Re-Entry Permit remains valid.)

• No mandatory contributions: Neither you nor your overseas employer need to contribute while you are away.
• Usage: While you can’t use CPF for overseas housing or medical bills, you can still use it for eligible family members living in Singapore.
  

2. Renouncing your PR status

If you decide to leave Singapore permanently and renounce your PR status, you can withdraw your savings in full.

It is much easier to settle this before you leave. Book an appointment with the CPF Board (or use the online form if you are Malaysian) to close your account and transfer your money. If you don't manually close it, your account will automatically close the month after your renunciation.

Once an account is slated for closure due to renunciation, it stops earning the attractive CPF interest rates (currently 2.5% to 4% or more). Instead, it earns an interest similar to commercial bank interest rates until 31 March 2027. After this date, any funds remaining in “closed” accounts for former PRs will stop earning interest entirely.

Ready to get started?

To wrap things up, here’s a summary of your next steps for the first few months and beyond of your PR journey.

Your new PR financial checklist

• Choose your contribution rate: Decide if you’ll stay on the Default Graduated Rates to keep your take-home pay steady, or make a Joint Application with your company HR to move to Full rates early to grow your savings faster.

• Replan your monthly budget: Your take-home pay will decrease by 5% to 20% depending on your contribution rate. Review your monthly expenses to adjust for this change in cash flow.

• Optimise tax & SRS planning: Becoming PR, your annual SRS contribution cap drops from S$35,700 to S$15,300. To offset this, leverage your new mandatory and voluntary CPF contributions, which are now tax-deductible. Use these together to effectively lower your taxable income while building your retirement floor.

• Map out your retirement: Use your Singpass to access the CPF Portal. Familiarise yourself with your four accounts: OA, MA, SA, and RA. Try the Retirement Payout Planner on the CPF website. It helps you see how your current savings will translate into monthly CPF LIFE payouts after age 65.

• Review your investment options: Once you hit the minimum balances ($20k in OA, or$40k in SA), decide if you want to keep the guaranteed interest or explore CPFIS for potentially higher returns.

• Consider voluntary top-ups: If you have extra cash, look into the RSTU scheme. It’s a great way to boost your future payouts while getting a tax break today.

• Nominate your beneficiaries: CPF savings are not covered by a standard will. Make a CPF Nomination online to ensure your savings go to your loved ones exactly as you intend.

Frequently asked questions

How do I determine the start and end date of my lower CPF contribution rate?

The first year of your Permanent Resident status begins at the date of approval of your entry permit (Form 5 or Form 5A), and it ends on the last day before the second anniversary of your SPR conversion.

Consider this example:

Do you have to prorate CPF contributions?

If you obtained your PR status partway through a month, both your employee and employer CPF contributions will be prorated to reflect the specific number of days remaining in that month.

Here’s how to calculate the prorated CPF:

1. Find out your CPF contribution rate: Determine what the contribution arrangement is for you and your employer, and the respective contribution rates.
2. Calculate daily contribution rate: Divide the monthly contribution rate by the number of days in that month to determine a daily rate.
3. Apply to remaining days: Multiply this daily rate by the number of days remaining from the date of PR approval to the end of the month.

Example of a prorated contribution

Let’s say your PR status was approved on the 15th of June, and you’re on the Graduated (G/G) rate for your first year:

• Total number of days in June: 30
• Days as PR in June: 16 (from 15th to 30th)
• Monthly CPF contribution rate for employee: 5% 
• Monthly CPF contribution rate for employer: 4% 

In this case, the monthly CPF contribution amount would be prorated to cover just these 16 days, and both you and your employer would contribute accordingly.

This prorated system helps to ease you into CPF contributions as a new PR without requiring a full month’s contribution when you haven’t held PR status for the entire month.

For precise calculations, you can use the CPF contribution calculator.

What happens to my CPFIS investments or CPF LIFE when I renounce my PR status?

When you renounce your PR status, your CPF LIFE plan will be terminated, and your CPF LIFE premium balance (if any) and CPF savings will be transferred to your bank account. 

For CPFIS-OA, CPF will inform your agent bank to close your CPF Investment Account. The agent bank will then contact you for the withdrawal of your investments and cash balance (if any). Your investments will be transferred to your own name, and you may choose to continue servicing your investments using cash or liquidate them.

Similarly for CPFIS-SA, CPF will inform your product provider to transfer your investment to your own name. 

For more information on how renouncing your PR status will affect your participation in schemes, visit CPF’s FAQ page here.