SINGAPORE – Central Provident Fund (CPF) members will now have another option to enjoy higher interest rates on their Ordinary Account (OA) savings.
OCBC Bank is offering a promotional rate of 3.88 per cent a year if they place a minimum of $20,000 with the bank for eight months from Wednesday.
CPF members who do not bank at OCBC currently can also take up this offer at any OCBC branch.
At 3.88 per cent, the fixed deposit offer is on a par with the latest six-month Treasury bills (T-bills), which give a cut-off yield of 3.88 per cent.
CPF members can also invest their OA savings in T-bills.
OCBC’s offer of 3.4 per cent for CPF members to put their OA savings with the bank for 12 months remains on the table.
The current CPF OA rate remains at the legislated minimum of 2.5 per cent, and CPF members have been looking for ways to grow the returns from their CPF savings.
On Tuesday, Manpower Minister Tan See Leng responded to a parliamentary question on whether there are plans to incentivise CPF members with high OA savings to tap alternative options for higher interest earnings.
He said they could put their CPF funds into short-term Singapore Government Securities (SGS) products like T-bills.
He added that OCBC and UOB customers will be able to use their CPF savings to apply for T-bills online by the first quarter of 2023, after DBS Bank first allowed customers to do so in late January.
OCBC confirmed to The Straits Times on Tuesday evening that its customers will be able to use their mobile apps and Internet banking accounts to invest their OA and Special Account (SA) funds in T-bills from March.
Mr Na Kok Peng, head of deposits at OCBC, said it is working with the CPF Board to ensure customers have a seamless experience when they apply for T-bills online and on their mobile apps.
For instance, customers can view their CPF details, such as the amount of funds they can invest, before they apply for the T-bills.
Mr Na added that this helps prevent transactional errors, and allows customers to better plan the investment of their CPF funds.
Mr Benny Chan, managing director of group channels and digitalisation at UOB, said the bank has received feedback and is enhancing its digital platforms to enable customers to apply for T-bills online with their CPF funds “in the near future”.
He noted that T-bill applications at its branches have slowed in recent weeks.
In January, DBS customers were the first to go online to apply for T-bills using their CPF OA savings.
In the most recent T-bill auction last Thursday, DBS said nine in 10 T-bill applications were made online using CPF funds.
The bank has said it is looking at extending the service to SA funds and will also allow mobile applications soon.
There have been calls to allow CPF members to submit applications for T-bills online following long queues at branches of the three local banks – DBS, OCBC and UOB.
Previously, investors who wanted to use their CPF funds to buy T-bills had to do so in person at the banks.
Besides short-term SGS products like T-bills, Dr Tan said the CPF Investment Scheme offers a range of investment products of different risk profiles.
Alternatively, he added, CPF members could consider transferring their OA savings to their SA or their Retirement Account (RA) to earn a higher risk-free interest of up to 6 per cent a year.
They can transfer up to the prevailing Full Retirement Sum of $198,800 to their SA if they are below 55, and up to the prevailing Enhanced Retirement Sum of $298,200 to their RA if they are 55 and above.