(Hold on to your pants….this quick post is actually on the merit of that unloved feature of CPF…the accrued interest…haha)
So Ms. K and I were looking at our CPF* online statements and we happened to look at section C which showed the net amount used for our property and there was the usual line for accrued interest**. Ms. K passed an offhand comment saying “Why do they want to even show this line?”
I blurted out, “Think of your CPF account as a separate entity. Its over riding purpose is to ensure that there is a sufficient amount of retirement funds set aside for your golden years. If you are taking any of your CPF funds to use for the purchase of a property, you are essentially borrowing from your future self…and your future self wants to get paid the interest that it missed out on lady!”
Okay, I admit that sounded a bit too passionate there. I guess I have a flair for the dramatic. Plus this was after a bottle of very nice Barossa Valley Shiraz between us. Haha…
Anyway, my point remains valid. If you consider CPF as your retirement trust, you can’t just take money out and don’t pay it back because “it’s my money anyway”. It kind of is, but is not. It belongs to the future you…and the future you will thank you for setting aside money for retirement.
Notes for non-Singaporean readers:
*CPF – Singapore’s superannuation fund that’s mandatory for all residents.
** Accrued interest – a notional amount computed by CPF as the “lost interest” from early withdrawals for certain allowed uses such as for the purchase of property, investment in a limited range of funds/stocks/gold and education. If the property or investment is sold, the relevant amount of sale proceeds will be retained to make good this lost interest.
