SINGAPORE - The Government further extended the 4 per cent floor rate for interest earned on all Special, MediSave and Retirement Account (SMRA) monies for another year until Dec 31, 2019.
In a joint statement on Thursday (Sept 27), the Housing Board (HDB) and Central Provident Fund (CPF) Board said that this decision was made due to the continuing low interest rate environment.
Since Jan 1, 2008, savings in the SMRA 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.
The statement explained that this is a market-based rate for instruments of comparable risk and duration, and will ensure that members receive fair and reasonable interest rates.
To help members cope with the transition, the Government had committed to providing a 4 per cent floor rate for SMRA monies, for two years up to December 2009.
This was subsequently extended in the light of global economic conditions and the fact that interest rates had been exceptionally low.
Prior to the extension, the current 4 per cent floor rate was due to expire on Dec 31 this year.
From Oct 1 to Dec 31, 2018, CPF members will continue to earn interest rates of up to 3.5 per cent per annum on their Ordinary Account monies, and up to 5 per cent per annum on their Special and MediSave accounts' monies in the last quarter of 2018.
These interest rates include an extra 1 per cent interest paid on the first $60,000 of a member's combined balances, which is part of the Government's efforts to enhance the retirement savings of CPF members.
Up to $20,000 of this $60,000 comes from a member's Ordinary Account.
CPF members aged 55 and above will also earn an additional 1 per cent interest on the first $30,000 of their combined balances. This is paid over and above the current extra 1 per cent interest that is earned on the first $60,000 of their combined balances.
As a result, CPF members aged 55 and above will earn up to 6 per cent interest per year on their retirement balances.
The extra interest received on a member's Ordinary Account will go into their Special Account or Retirement Account to enhance their retirement savings.
If a member is above 55 years old and participates in the CPF Life scheme, the extra interest will still be earned on their combined balances, which includes the savings used for CPF Life.
Additionally, the interest rate for Ordinary Accounts will be maintained at 2.5 per cent per annum from Oct 1 to Dec 31, 2018, as the computed rate of 0.32 per cent is lower than the legislated minimum interest rate.
Correspondingly, the concessionary interest rate for HDB mortgage loans, which is pegged at 0.1 per cent above the Ordinary Account interest rate, will remain unchanged at 2.6 per cent per annum during the same time period.
CPF members who have further inquiries may visit cpf.gov.sg or call the CPF call centre on 1800-227-1188.