Calvin and his fiancée have a combined monthly income of $4,200. Their combined monthly Ordinary Account (OA) contributions from their employer and self is $966 (23% x $4200).
Weighing the pros and cons, they decided on a 4-room flat in a non-mature estate. As their combined monthly income is also less than $8,000, they are eligible for the
Special CPF Housing Grant (SHG) and Additional CPF Housing Grant (AHG).
Based on their combined income, they will receive $10,000 under SHG and $40,000 under AHG. This will help them reduce their monthly instalments from $1,225 to $998. With the reduced monthly instalments, they will only need to fork out $32 in cash if they exhaust their monthly contribution to their OA to pay for their flat.
Food for thought
If Calvin and his fiancée decide to use only 80% of their OA contributions to pay their monthly instalments and save 20% of it (which works out to about $159 - $193/month), it would go a long way to securing their retirement as it would accumulate to more than $75,000* in their OA over 25 years!
Calvin & Fiancée's age|
Monthly OA contributions
(from employer and self)
20% of OA savings/month ||
Accumulated OA Savings||
Total Interest earned |
35 and below|
(23% x $4,200)
[$193.20/month x 10 years]
Above 35 – 45 |
(21% x $4,200)
[$176.40/month x 10 years]
Above 45 – 50 |
(19% x $4,200)
[$159.60/month x 5 years]
*Accumulated OA savings is based on 20% of Calvin and his fiancée's OA contributions based on the different age bands.
Total interest earned is derived based on the total accumulated OA savings + interest earned in the period prior.
Eg: Total interest earned from 35 – 45 is compounded based on accumulated OA savings before 35 + total interest earned before 35 + accumulated OA savings 35-45.
The interest earned on OA savings is 2.5% interest per annum and compounded annually.