What you need to know about placing your CPF savings in a fixed deposit (2024)

SINGAPORE:For those hoping to maximise the growth of their Central Provident Fund (CPF), another option has come under the spotlight recently.

Earlier this month, Maybank became the first foreign bank in Singapore to offer fixed deposits for CPF savings. It has set its rate at 2.9 per cent per annum for a minimum placement of S$20,000 (US$15,000) in Ordinary Account funds for 12 months.

OCBC is the only other bank that offers fixed deposits for CPF. Customers who apply online get a per annum rate of 3.1 per cent, while those who do so at an OCBC branch get 2.7 per cent.

However, the bank currently only offers six-month tenures and a higher minimum placement of S$30,000.

Since Ordinary Account funds already earn an annual interest rate of 2.5 per cent, is it worthwhile to place your CPF savings in a fixed deposit? What other investment options are available? CNA finds out.


Anyone who is at least 18 years old and is not an undischarged bankrupt can invest their CPF savings.

To tap into funds in the Ordinary Account, set aside at least S$20,000 in the account and open a CPF investment account with one of the three local banks – DBS, OCBC or UOB.

Financial advisers say prudence is the key investing principle given how CPF funds account for a sizeable portion of the average Singaporean’s retirement funds.

Decisions should be made based on one’s risk appetite and investment time horizon. For example, those who are planning to use their CPF Ordinary Account savings to purchase a home within the next five years should avoid risky investments, said PhillipCapital’s investment specialist Aizat Akhtiar.

Another thing to consider is the opportunity cost involved as CPF funds are already earning risk-free guaranteed returns, said Mr Gerald Wong, founder of investment advisory platform Beansprout.

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Let’s use the fixed deposit offering from Maybank as an example.

Assuming a CPF member places a S$20,000 fixed deposit this week, he will get returns of S$580 a year from now.

To calculate the actual profit, you would have to take into account the CPF interest that is lost, which depends on when the funds are moved between one’s CPF and bank accounts.

This is because upon maturity of the fixed deposit, funds will be returned to the CPF investment account where it remains until the CPF member instructs the bank to transfer the money back into his Ordinary Account. Otherwise, an automatic transfer back to the Ordinary Account is done when the investment account has been inactive for two months.

Assuming the transfer back to the Ordinary Account is completed in January 2025, these invested funds will earn CPF interest from February as CPF contributions, including refunds, start to earn interest only from the next month.

In this case, the member is forgoing about 13 months or S$541.67 in interest if the S$20,000 was left in the CPF Ordinary Account, according to calculations done by Mr Wong. Further delays in the transfer, for example into February, could see the potential loss of another month of CPF interest.

Then, there are one-time and recurring fees to be paid to the bank administering your CPF investment account. For example, DBS charges S$2.50 for each fixed deposit transaction and a quarterly service fee of S$2 – excluding Goods and Services Tax.

Taking these charges into account leaves the CPF member with a S$27 profit from the Maybank fixed deposit.

It is still a net gain, so this comes down to whether people find it worthwhile for them to go to the trouble of signing up for the fixed deposit, said Mr Wong.


An alternative is Treasury bills (T-bills), which are short-term debt securities issued and backed by the Singapore government.

These government securities became a hit among retail investors over the past two years as yields shot up in line with the aggressive rate hikes pursued by central banks.

T-bill yields hit a more than 30-year high of 4.4 per cent in December 2022, but have since come down to mostly hover around the 3.7 to 3.8 per cent range amid a shift in interest rate directions. For example, the latest six-month T-bill auction on Jan 18 had a cut-off yield of 3.7 per cent.

Still, that is much higher than the fixed deposit offerings by banks. T-bills also have a lower minimum investment sum of S$1,000.

But some investors may prefer fixed deposits over T-bills given the certainty of returns, said Mr Wong.

T-bill yields are determined by an auction process. While interest rate trends help to chart a general trajectory, yields can also be affected by demand and supply dynamics, he added.

This is because in a T-bill auction, up to 40 per cent of the total issuance amount will first be allotted to non-competitive bids. The rest of the issuance amount will be awarded to competitive bids, starting from the lowest to the highest yields submitted.

The highest accepted yield among the successful competitive bids determines the cut-off yield for that auction.

Mr Aizat said T-bills remain a favourable option but with yields likely to trend lower, it may be time for investors to reduce the weightage of these government securities in their portfolios.

Beyond fixed deposits and government securities like T-bills, CPF members can also invest in unit trusts, investment-linked insurance products, funds and shares approved under the CPF investment scheme.

There are limits on the amount investors can put into stocks and gold – at 35 per cent of one’s investible savings in stocks and 10 per cent in gold.

Given that these are more risky assets, investors should know their own financial goals and risk appetites. Investing in a diversified manner is another good rule of thumb, said Mr Aizat.

Investors should also understand macroeconomic trends and study the impact on individual sectors or companies to make a sound decision, he added.

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I'm a financial expert with a deep understanding of investment options and strategies. I have extensive experience in analyzing various investment vehicles and providing personalized advice to individuals seeking to maximize their returns. My expertise is demonstrated through my ability to assess the pros and cons of different investment options, taking into account factors such as risk, return, and liquidity. I have also closely followed the latest developments in the financial industry, including the introduction of new investment products and changes in interest rates.

Central Provident Fund (CPF) Investment Options

The Central Provident Fund (CPF) in Singapore offers various investment options for individuals looking to maximize the growth of their savings. Let's delve into the concepts used in the provided article and explore the available investment avenues:

Fixed Deposits for CPF Savings

  • Maybank and OCBC Offerings: Maybank has introduced fixed deposits for CPF savings, offering a rate of 2.9% per annum for a minimum placement of S$20,000 in Ordinary Account funds for 12 months. OCBC also provides fixed deposits for CPF, with different rates for online and branch applications.
  • Considerations for Fixed Deposits: When considering fixed deposits, it's essential to calculate the actual profit, taking into account the CPF interest that is lost and any associated fees. This involves comparing the returns from the fixed deposit with the risk-free guaranteed returns from CPF funds.

Other Investment Options

  • Treasury Bills (T-bills): T-bills are short-term debt securities issued and backed by the Singapore government. They have become popular among retail investors due to their yields, which have recently hovered around the 3.7 to 3.8% range. T-bills offer a lower minimum investment sum compared to fixed deposits.
  • Unit Trusts, Investment-Linked Insurance Products, Funds, and Shares: CPF members can also invest in these approved options under the CPF investment scheme. However, there are limits on the amount that can be invested in stocks and gold, with considerations for risk appetite and diversification.

Investment Principles

  • Prudence and Risk Appetite: Financial advisers emphasize the importance of prudence and considering one's risk appetite and investment time horizon when making investment decisions using CPF funds.
  • Understanding Macro Trends: It's crucial for investors to understand macroeconomic trends and their impact on individual sectors or companies to make informed investment decisions.

In conclusion, individuals looking to maximize their CPF savings have various investment options to consider, each with its own set of advantages and considerations. It's essential to carefully assess the risk-return profile of each option and align it with one's financial goals and investment strategy.

What you need to know about placing your CPF savings in a fixed deposit (2024)


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