4% interest rate for Special, Medisave and Retirement CPF accounts extended

 People walking past the CPF building along Shenton Way, 5 January 2012. The 4 per cent minimum interest rate on Central Provident Fund (CPF) savings in the Special, Medisave and Retirement accounts (SMRA) will be extended to Dec 31 next ye
 People walking past the CPF building along Shenton Way, 5 January 2012. The 4 per cent minimum interest rate on Central Provident Fund (CPF) savings in the Special, Medisave and Retirement accounts (SMRA) will be extended to Dec 31 next year. -- ST FILE PHOTO: CAROLINE CHIA

The 4 per cent minimum interest rate on Central Provident Fund (CPF) savings in the Special, Medisave and Retirement accounts (SMRA) will be extended to Dec 31 next year. The CPF Board said that this was in view of the uncertainty in the global economy and low interest rate environment. It was meant to expire at the end of this year.

The first $60,000 of a CPF member's combined savings earn an additional 1 per cent interest, so with the extension, that amount will continue to earn 5 per cent interest.

Since 2008, the SMRA savings have been invested in Special Singapore Government Securities, which earn an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities plus 1 per cent. From Jan 1 2015, the SMRA interest rates will be pegged to that rate, subject to the minimum rate of 2.5 per cent a year that applies to all CPF accounts.

But when the change was first made, the Government committed to a 4 per cent minimum interest rate up to Dec 2009, to ease the transition. This has been extended every year since then.