CPF
What is CPF Ordinary Account (OA)?
The CPF account you can use for housing, approved investments, insurance and education. It earns a floor of 2.5% a year — lower than the other accounts — which is why many members consider moving spare OA savings to retirement savings.
What you can use your OA for
Ordinary Account savings are the most flexible part of CPF. You can use them to pay the downpayment and monthly instalments on an HDB flat or private home, repay an education loan for yourself or your children, buy approved investments through the CPF Investment Scheme, and pay certain insurance premiums. It is the only CPF account you can readily put to use before retirement.
The interest trade-off
The OA earns a floor of 2.5% a year — the lowest of the CPF accounts, versus around 4% in the Special and Retirement Accounts (and the first $60,000 of combined balances earns an extra 1%). Because of this gap, members with spare OA savings sometimes transfer them to the Special Account before 55 to earn more, though the transfer is irreversible and locks the money away for retirement.
Using OA for housing also carries a hidden cost: when you sell, you must refund the amount used plus the 2.5% interest it would otherwise have earned — the CPF “accrued interest” — back into your CPF, which reduces the cash you walk away with.