How does the CPF interest system works?

[henrylbh]

It does not matter where the additional 1% is calculated (be it OA/SA/MA). The interest amount is the same as long as the principal u used to calculate it the same.

It does matter in the example I gave in post #18?

 

[curious_moo]

It does matter in the example I gave in post #18?

What you mentioned was already pointed out by others in the first page. And i have already answered that the formula only works for me as i have explained in post #6

 

[dork32]

i am not sure why you need to be so defensive and talking rude.
your understand as you said, is based on your assumption that when someone said OA interest is up to 3.5%, it means compounded annually at 3.5%.
but mind you that I never said that, I merely said that OA amount can earn up to 3.5% interest (i.e. 3.5% interested is calculated on 20k of OA every year), and quite frankly im not sure what is so wrong about that statement. If you have only 20k in your OA, ultimately it means 3.5% p.a for that year, and if you have more than 20k in your OA, you get < 3.5% for that year. If you due diligently transfer to SA in excess of 20k, it means that you do get 3.5% most of the time.

ultimately it doesnt matter where that interest went, its still a 3.5% on 20k of oa. duh. your the one who needs to get ur facts right, and stop putting your assumptions on everyone else's statements.

this is sort of posting is misleading.

it does matter where the interest goes to, epecially if you are in the 20s and 30s. the sa is a useless account at this stage. oa can be used to fund your hdb purchases and lower your housing loan. it is real money. sa is fake money at this stage. sa can be used to boost your ego and thats it.

if you are in your 40s and 50s. yes sa becomes more real. but by that time your sa, ma would have built up. it does not matter how much your oa has then, you will still be earning that extra 1%

eg i have now
0 oa
50k sa
50k ma
1 year later i have
0 oa
52.6k sa
52k ma

or i have now
100k oa
50k sa
50k ma
1 year later i have
102.5k oa
52.6k sa
52k ma

where is the 3.5% interest?

 

[dork32]

i am not sure why you need to be so defensive and talking rude.
.

yes i am rude, but only to people that does not know facts, but come here to post rubbish.

it is like telling everyone that cpf life standard earns a 4+1+1% interest. this interest does not go to you but to the lifelong income fund.
because of this many people here are opting for the basic. yes it matters where the interest goes to.

 

[dork32]

our garmen is good at posting half truth to con people. we dont need another puppet here to perpetuate this. we need hardcore facts

 

[BBCWatcher]

it does matter where the interest goes to, epecially if you are in the 20s and 30s. the sa is a useless account at this stage. oa can be used to fund your hdb purchases and lower your housing loan. it is real money. sa is fake money at this stage. sa can be used to boost your ego and thats it.

No, that’s not correct. Your Special Account is analogous to (excellent) accumulating whole life insurance with a surrender option from age 55. If you predecease your CPF nominated heir(s), your SA is theirs, immediately.

There are all sorts of “time locks” that individuals willingly accept, even embrace: HDB Minimum Occupancy Periods, traditional corporate pensions (now mainly for the top executive ranks), Supplementary Retirement Scheme accounts, stock options, minimum holding periods after IPOs, educational investments, apprenticeships and other career time phenomena, whole life insurance policies, deferred annuities, marrying, having or adopting a child.... All of these are “time locks,” some of them very long. I don’t know why you and many others single out CPF’s Special Account for special dismissal. Yes, it has a time lock that’s released upon death, grave emergency, or age 55, whichever comes first. In exchange, you’re well compensated: contributions generally pre-tax, at least 4% interest from a AAA government that only pays 2% on its longest bond debt, and unique asset protection characteristics. You may or may not like that deal, but it is a deal. These assets count; they have value. Zero value is the wrong answer....

....But if you think zero is the correct value, no problem, just name me (or a person or charity I designate) as your nominee for your CPF Special Account. Then you won’t have to worry about that worthless asset. Deal?