When Should You Consider Voluntary CPF Contributions?

Given we live in the era of “doomscrolling” on TikTok and instant gratification, the thought of voluntarily contributing to our CPF (when we won’t see that coin for another few decades) seems kind of silly.

BUT contributing voluntarily to your CPF can actually–believe it or not?!–have positive benefits for us in the here and now.

Otherwise, we wouldn’t have so many people doing it, right? Locking up our money long term because we are sooooo aware of our retirement planning doesn’t seem like it’d take off unless there was something else to the story. And there certainly is.

Here’s what you need to know about CPF voluntary contributions and whether it’s a good idea to contribute voluntarily to Singapore’s retirement scheme.

What Are Voluntary CPF Contributions?

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First off, we need to establish what exactly a voluntary CPF contribution is. As the name suggests, it’s completely “voluntary” so no one (including the Singapore government) is making you contribute.

It’s above what you are required to contribute, otherwise known as “mandatory” contributions. Remember that mandatory contributions are calculated as 17% coming from you and 20% coming from your employer.

That gives you a total of 37% of your monthly pay in mandatory contributions but with the CPF monthly salary ceiling currently set at S$6,800. However, do note that this ceiling will gradually rise to S$8,000 by 1 January 2026.

CPF cash top-ups for you and your loved ones

By topping up your CPF voluntarily, you are basically going above and beyond that 17% monthly mandatory contribution. It’s important to take note that voluntary cash top-ups are irreversible so be 100% sure you’re ok putting that money away for retirement.

Additionally, voluntary contributions doesn’t necessarily mean just contributing to yourself. You can also contribute voluntarily to the CPF accounts of your “loved ones”, which the CPF defines as your spouse, siblings, parents, parents-in-law, grandparents, and grandparents-in-law.

Voluntary cash top-ups annual limit

Before you go out and start contributing, it’s worth knowing that there is a cap to the amount that you can voluntarily top up to your CPF.

The maximum amount is the difference between the CPF Annual Limit–set at S$37,740–and the mandatory CPF contributions made for the calendar year.

Say, for example, that you earn S$5,000 per month, your mandatory contributions in a calendar year would break down like this:

• $1,000 ($5,000 x 20%) + $850 ($5,000 x 17%) x 12 months = $22,200

So, the maximum you could voluntarily contribute to your CPF in a year is S$15,540 ($37,740 – $22,200).

Benefits of Voluntary CPF Contributions

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Tax relief

One of the biggest benefits of voluntary contributions to your CPF is that you can receive tax relief for it.

For contributions to yourself, you can receive the equivalent amount of tax relief for cash top-ups made in each calendar year, of up to S$8,000.

You can receive an additional S$8,000 if you make voluntary cash top-ups to your loved ones. However, do note that there is maximum cap on tax reliefs across all relief categories, set at S$80,000.

If you’re thinking everyone “wins” from a tax perspective, just remember that it’s only the contributor of funds that is eligible to claim tax relief for CPF cash top-ups, not the recipients.

Retirement savings and flexibility

Yes, tax reliefs are sweet–of course. But the other big benefit further down the line is the fact that voluntary CPF contributions today will help grow your retirement nest egg.

For retirement purposes, this is mainly under the Retirement Sum Topping Up Scheme (RSTU). With this, you can initiate cash top-ups to your Special Account (SA) – if you’re under 55 – up to the Full Retirement Sum (FRS) that’s currently at S$205,800 for 2024.

If you’re aged 55 and above, you can voluntarily top-up to your Retirement Account (RA) up to the current Enhanced Retirement Sum (ERS) of S$308,700 although this will go up to S$426,000 in 2025.

That’s because the ERS will be raised from 3 times the Basic Retirement Sum (BRS) that it’s set at now to 4 times the BRS in 2025.

There’s also added flexibility in how you allocate voluntary contribution in that you can also top-up your MediSave account. This lets you allocate your voluntary contributions to either retirement savings or medical/healthcare costs.

It should be noted that voluntary top-ups cannot be made solely to the Ordinary Account (OA).

When to Consider Voluntary CPF Contributions

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Surplus cash and interest rates

Alright, so you’ve got the basics down on what voluntary CPF contributions are. But when should you actually think about contributing on a voluntary basis?

The most obvious scenario is if you have extra cash lying around that’s not doing anything. Remember that money in your SA, RA, and MediSave Account (MA) all earn interest of 4.05% per year.

While that may not seem like a great deal right now, if interest rates were to fall in future, then your decision to contribute voluntarily to accounts yielding over 4% would look pretty smart.

So, if you do voluntarily contribute to your CPF, you’ll still earn that interest and save on your taxes.

Self-employed individuals

If you’re self-employed, you’re not getting that monthly contribution from your employer so the breakdown of contributions is different.

However, you’re still required to make mandatory contributions into your MA. Anything beyond that is considered a voluntary contribution.

Yet the breakdown of voluntary contributions for self-employed persons (SEPs) has to be spread across the 3 CPF accounts in line with the allocation ratios that employed CPF members use when receiving their mandatory contributions.

Clearly, that means your SA and MA isn’t going to get as much love if you’re younger. It’s also a key reason why if you are an SEP, and have the capacity to contribute, then being able to put more money away for security purposes is important.

Planning for early retirement and healthcare costs

If you just want to “call it a day” and not work anymore, figuring out how much you need to retire comfortably is going to be kind of important.

It’s also going to mean you’ll need to top up that SA/RA and MA as much as you can to meet the FRS/ERS or your healthcare costs in older age.

Having a gameplan and maximising both your retirement savings and tax savings at the same time will help you reach that goal of retiring earlier.

If you also feel like you’re falling short on the MA side of the equation, voluntary CPF contributions to this account can really help shore up your cash position for any healthcare-related costs that might be necessary.

Limitations and Considerations

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Voluntary cash top-ups annual limit

Before you go out and start contributing, it’s worth knowing that there is a cap to the amount that you can voluntarily top up to your CPF.

The maximum amount is the difference between the CPF Annual Limit – set at S$37,740 – and the mandatory CPF contributions made for the calendar year.

Say, for example, that you earn S$5,000 per month, your mandatory contributions in a calendar year would break down like this:

$1,000 ($5,000 x 20%) + $850 ($5,000 x 17%) x 12 months = $22,200

So, the maximum you could voluntarily contribute to your CPF in a year is S$15,540 ($37,740 – $22,200).

Opportunity costs and liquidity concerns

Finally, we have that whole issue of “opportunity cost” to contend with. What else could we have done with that money we voluntarily contributed to our CPF?

Could it have done a better job for us invested into global stock markets? Or could we have used that money for building up an emergency fund?

These are key questions you need to ask yourself and assess before you contribute given – as if we need reminding! – voluntary CPF contributions are irreversible.

There’s also the issue of liquidity and whether we need the cash (we would have voluntarily contributed to our CPF) in the short term.

Understanding your financial situation, health and cash flows will help you form a better understanding of whether voluntary CPF contributions make sense for you.