A Muslim who is obligated (wajib) to pay Zakat CPF is allowed to choose between the two religious approaches regarding Zakat on CPF savings which is as follows:
1st approach to CPF calculation
If a person who receives CPF monies is living comfortably and has no difficulty in paying Zakat every year either through personal savings or in arrears when CPF monies is withdrawn, then he/she is obligated to pay Zakat from the year nisab is reached until withdrawal of CPF monies.
2nd approach to CPF calculation
If a person still has financial commitment and will incur great hardship (eg. still has outstanding loans to pay off) if he/she pays in arrears, Fatwa rules that the person pays Zakat based on 2.5% of the amount received from his/her CPF savings when he/she reaches 55 years old.
Medisave Account is not accountable for Zakat because its use is restricted to what has been determined by the CPF Board; that is for medical expenses only. It is therefore an incomplete possession and can only be withdrawn when one has passed away.
Special Account is also not accountable for Zakat because it is an incomplete possession. The savings can be withdrawn as a retirement fund only.
Fatwa Committee has decided that Ordinary Account in one’s CPF is considered as a complete possession. The Ordinary Account can be used for investment, purchasing of house, insurance, etc which is permissible by the CPF Board. This means that Zakat is obligatory to be paid when nisab is reached and haul is completed, although the money is still in the CPF Fund.
Example in Calculating Zakat on CPF
Today's Nisab from the website
Mr Ali, aged 55 years old, had worked for 15 years before withdrawing his CPF savings. His CPF can be withdrawn and he wishes to pay his Zakat on CPF savings.
Ordinary Account (A) ($)
Accumulated Previous Years' Zakat (B) ($)
Total (A-B) ($)
Zakat Payable (A-B) x 2.5% ($)
Total Zakat Payable
Example Using First Approach
The obligatory Zakat payable after CPF withdrawal is: = Total Zakat Payable = $10,139.34
Example Using Second Approach
Amount of CPF Savings withdrawn from the Ordinary Account in 2012 is $58,961.00. The obligatory Zakat payable after CPF withdrawal is: = $58,961 x 2.5% = $1474.03