Many Singaporeans use most of their CPF Ordinary Account savings to buy a flat or condo. This works well for owning a home but it usually means they have less money in their CPF for retirement. The good news is that the Voluntary Housing Refund scheme lets you put back the CPF money you used for housing before you sell your property. Doing this can really boost your retirement savings over time.
How the Voluntary Housing Refund Works
The VHR is a voluntary program from the CPF Board that lets you put back some or all of the CPF money you used to buy your home into your CPF account while you still own the property. This includes the original amount plus any interest that would have accumulated. It works like repaying yourself before you have to. When you eventually sell your property you will owe less money back to CPF. At the same time your CPF savings grow faster because they earn guaranteed interest rates of up to 2.5% in your Ordinary Account and 4% in your Special Account or Retirement Account.
– You’ll have higher CPF payouts during retirement.
– You’ll enjoy larger cash proceeds when you sell your property, since you’ll owe less in refunds at that point.
Why It Matters Now
Housing costs keep climbing and people are living longer than before. This makes retirement planning a major worry across the country. The VHR program helps solve this problem by letting Singaporeans slowly rebuild their CPF accounts without needing to sell their homes first. Here is how it works in practice: suppose you took out $100000 from your CPF account to purchase your house. After ten years pass the amount you need to return grows to about $128,000 because of accumulated interest. If you make a voluntary payment of $20,000 during those ten years you reduce the final amount you owe. You also benefit from compound interest building up in your CPF account over several years.
Who Can Apply and How It’s Credited
Anyone who used their CPF Ordinary Account money to pay for property can do this. You can return some or all of the money through the myCPF website or mobile app using PayNow or eNETS. If you are younger than 55 years old the money goes back into your Ordinary Account. If you are 55 or older the money first helps you reach the Full Retirement Sum so you can get better monthly payments when you retire. If you received more than $30000 in housing grants then some of the refunded money will go into your Special Account or Retirement Account or MediSave Account. This helps pay for your healthcare and retirement expenses.
Things to Consider Before Refunding
While VHR provides long-term financial advantages, you should not hurry into it. Ensure you maintain sufficient liquid savings for immediate needs like medical expenses or school fees. CPF functions as a secure platform that earns interest, but it lacks the flexibility of cash. Nevertheless, for the majority of homeowners the VHR represents a straightforward & low-risk method to enhance future financial security. You are basically transferring funds from a bank account with minimal returns into a savings system backed by the government that offers better returns.
