I think there are quite a few readers who are confused about the difference between contributing to their CPF account and topping up their CPF account.

I understand their confusion. Once upon a time, I was confused too.

1. There is such a thing as the CPF annual contribution limit. Basically, our mandatory contribution (MC) and voluntary contribution (VC), if any, cannot exceed the annual contribution limit.

See: CPF Annual Limit and VC.

If we are working, chances are we are contributing to our CPF account. That is required by law. So, it is called mandatory contribution (MC).

If our MC does not hit the annual contribution limit, we can do VC to hit that limit.

VC can either be done purely to our CPF Medisave Account (MA) which then gives us income tax relief or it can be a regular VC which the CPF Board will apportion to our OA, SA and MA (or just the OA and SA if our MA has already hit the ceiling). A regular VC does not give us income tax relief.

For more information, see:
Online contribution to MA.and VC to my CPF accounts.

2. There is also the option to top up our CPF Special Account (SA). Known as minimum sum top up (MSTU), this is not subjected to the annual contribution limit.

The MSTU is instead limited by the prevailing minimum sum (MS) or what is now known as the full retirement sum (FRS). We get income tax relief for the first $7,000 of MSTU every year.

For more information, see: MSTU and interest computation.

So, do you want to contribute to your CPF account or do you want to top up your CPF account?

To the CPF Board, this is not simply a case of semantics.

This article originally appeared on AK’s blog.