When we talk about CPF SA shielding, it is to be executed right before age 55 and complete the shielding immediately after RA (retirement account) is formed at 55th birthday.
Year 2021 Full Retirement Sum (FRS) is S$186,000.
When you reach 55th this year, CPF will automatically deduct your SA amount first, e.g. S$186,000 to form RA account. As SA account draws 1.5% interest higher than OA account, you want CPF to deduct the big bulk of money from OA account instead of SA account. Hence, you are doing the CPF SA shielding by leaving minimum requirement of S$40,000 in SA account and move out all the remaining SA balance to buy short term bond (e.g. NIKKO AM SHENTON SHORT TERM BOND FUND). Then, CPF board can only deduct S$40,000 in SA and the remaining balance to be deducted from OA account instead. Once the RA account is formed with S$186,000 (year 2021 FRS figure), you shall immediately sell the bond fund and bring back the cash to SA account and enjoy the 4% interest.
Many people will quote the news article below whenever we talk about CPF SA shielding.
6 months before your 55th birthday, CPF will send you a birthday letter (as shown below). That's the letter everyone is waiting for at age of 54 ! :)
It's one good example from my "friend".