What is CPF Shielding?

Think about if “SA Shielding” is the best technique for your retirement planning after considering the benefits and drawbacks.

You may have heard of SA Shielding from friends or a financial advisor if you are a CPF member approaching 55 soon. This may have left you wondering whether protecting your Special Account is worth the effort, if you stand to gain anything by doing so, or if you stand to lose anything if you don’t.

To begin, let’s define SA Shielding.

When you reach the age of 55, the funds in your Special Account will not be “protected” by being moved into your Retirement Account. Please allow me to explain what happens to your CPF shielding accounts after you reach the age of 55 so that you may better understand this procedure.

The three CPF Accounts (Ordinary, Special, and MediSave) are available to you before age 55. When a Singaporean citizen reaches the age of 55, the CPF Board opens a fourth account for them called the Retirement Account. You will utilise this retirement fund to enrol in CPF LIFE, which will provide you with a steady income beginning when you become 65 years old. This retirement fund is comprised of money from both your Special and Ordinary Accounts.

To what extent would you prefer to utilise funds from the following accounts to fund your Retirement Account when you retire? You could have easily increased your savings interest by 3.5% p.a. with this method had you gone with the Ordinary Account. Or you might have responded that it doesn’t make a difference if you don’t care about the interest your investments yield. After all, you should prioritise having a comfortable cushion for your CPF LIFE payments.

The CPF Board will prioritise moving funds from your Special Account to your Retirement Account since the CPF Board knows that this is where you will need them throughout your retirement years. You may transfer up to your cohort’s Full Retirement Sum (FRS), which should be enough to cover your living needs for the rest of your life when you cash out your CPF LIFE account. The FRS for those who will reach 55 this year is $186,000. A portion of the funds in your Regular Account may be moved to your Special Account if there is insufficient money in the latter.

Some astute people in the past five years or so have figured out how to sidestep this procedure by taking use of one of the preexisting CPF schemes. The first $20,000 in your Ordinary Account and the first $40,000 in your Special Account are protected from being invested under the CPF Investment Scheme. Any money you invest in your CPF won’t be moved over to your IRA. That’s right; any money you put away in a Special Account beyond the first $40,000 won’t make its way into your Retirement Account. Since $40,000 won’t cut it for the FRS, the CPF Board will take what’s left in your Ordinary Account.

SA Shielding’s Advantages

By doing so, you have maximised the efficiency of the interest accrued on your total CPF balance. However, that’s not the whole story. Your CPF investments will be liquidated and the proceeds deposited into your Special Account. With the FRS met, your money may sit in a Special Account and collect 4% p.a. interest until you’re ready to withdraw it, at which point you’ll have your very own high-interest savings account.

Clients with even more initiative may choose to attempt a Dual Shield, investing all of their CPF funds over the limitations of both the Ordinary and Special Accounts. If they don’t have enough money in their Ordinary or Special Accounts to cover the FRS, they may put that money in their Retirement Account and earn a high rate of risk-free interest.

As you can see, SA Shielding like Direct Asia comprehensive value plan is legal since it makes advantage of pre-existing CPF schemes to arrive at a solution that, although not identical to the default, nonetheless achieves the policy goal of maximising your retirement savings via CPF LIFE. However, like with everything, you must be wary of the possibility of inappropriate use.

Cautionary Notes

Mis-selling is possible since you need to invest your Special Account funds. You may be advised to use a financial instrument with higher fees or more potential for loss than you are comfortable with, or even aware of. SA Shielding may not be worth it if investment losses mount. We advise you to put your money in short-term government bonds or treasury bills issued by the Singaporean government via your bank, or in a short-term bond fund like the Nikko AM Shenton Short Term Bond Fund. Because you want to transfer the money back to your Special Account within a few of months, you should prioritise low expenses and safety above returns.


Therefore, if you are wondering which credit card easy get approved Singapore, if you want to maximise the return you get on your CPF or cash savings, SA Shielding is a tool you may utilise. While it’s admirable to strive for greater returns, it’s also important to keep in mind that CPF is designed to provide you with a reliable income in retirement, thus your ultimate goal should be to have enough in your RA to cover your CPF LIFE payments.