CPF savings are primarily designed for your retirement needs. When you use these savings to purchase a property, the money is withdrawn from your CPF account and stops earning CPF interest. 

 

The CPF refund comprises both the principal amount withdrawn from your CPF savings for the property and the accrued interest. Accrued interest is the interest your CPF savings would have earned if they had remained in your account rather than being used for property purchase.

 

Refunding both the principal amount and accrued interest ensures your retirement savings are fully restored to what they would have been if they had remained in your CPF account. Without this refund, your retirement funds would be permanently reduced.

 

The calculation of accrued interest runs from the date you first used your CPF savings for the property until the date the CPF refund is made, based on CPF's prevailing interest rates and compounded annually throughout this period. It continues to accrue even after your housing loan has been fully repaid, as it is computed based on the CPF savings withdrawn for the property.