Do you know that at 4% per annum interest rate, your CPF Special Account (SA) current balance will double every 18 years thereabouts?
Do you also know that there’s a CPF Contribution Cap? That’s right. Only the “first” $6,000 of your monthly salary is subject to CPF contributions. Even if you earn a basic salary of $200,000 per month, your CPF contributions are calculated based on just $6,000. Try using the official CPF Calculator to see for yourself.
What about bonuses? Good question. Bonuses are considered “additional wages” and are subject to CPF contributions. However, there is also a cap called the Additional Wage Ceiling. The details are available here, but generally the combined Ordinary Wage and Additional Wage that are subject to CPF cannot exceed $102k per year. If you make $6k basic monthly and receive a $100k bonus at year end, only $30k of the bonus will be subject to CPF contributions (because 102 – 6×12 = 30).
So how much money do you have in your CPF Special Account?
Compare your CPF Special Account (SA) balance with that of the hypothetical guy who has been very lucky to be earning above the contribution cap his whole life and also receiving $30k bonuses every single year. See the chart below.
When he’s 50 years old, he has amassed almost $300k in his CPF SA account.
And due to the higher contribution rate from age 51 to 55, he will have more than half a million before reaching 60!
The calculation below takes into account the annual 4% compounding interest that CPF pays into his SA account (but it does not consider the overflow effect of a “full” Medisave Account).