Most of us have heard that CPF gives 2.5% interest in the Ordinary Account (OA) and 4% in the Special and MediSave Accounts (SA/MA). True — but few realise your actual return is higher than 2.5% or 4%, thanks to tax savings. CPF is not just a retirement account. It’s a government-sponsored, tax-advantaged savings vehicle. In short, CPF has a double tax advantage:

• Tax-deductible in (for employee’s contribution and top-ups)
• Tax-free out

Let’s break it down. (And no, this is not a sponsored post.) Tax-Deductible Contributions: You Save Upfront If you’re a Singaporean or PR employee, your monthly CPF contributions — 20% from you, 17% from your employer for those aged 55 and below — don’t count as taxable income. Think of it this way: if your employer gave you the full amount in cash instead, that money would be taxed. But since it goes into CPF, you get to keep the full contributions, untaxed. In fact, your CPF contribution goes to reduce your chargeable income, which means a...