Wednesday, September 30, 2015

4% floor rate for Special, Medisave, Retirement Accounts extended till end of 2016

SINGAPORE – In view of the continuing low interest rate environment, the Government has decided to further extend the 4 per cent floor rate for interest earned on all Special, Medisave and Retirement Account (SMRA) monies for another year until the end of 2016.

This will be a second extension, following one in 2009 when rates were extended in light of global economic conditions and the fact that interest rates had been exceptionally low. The 2009 extension was originally due to expire at the end of this year.

With the extension, Central Provident Fund (CPF) members will continue to earn interest rates of up to 3.5 per cent per annum on their Ordinary Account (OA) monies, and up to 5 per cent per annum on their SMRA monies in the fourth quarter of 2015.

The 3.5 per cent includes an additional 1 per cent interest paid on the first S$60,000 of a member’s combined balances (with up to S$20,000 from the OA) which is part of the Government’s efforts to enhance the retirement savings of CPF members.

As the base OA interest rate (2.5 per cent) is maintained for the next quarter, the concessionary interest rate for HDB mortgage loans – pegged at 0.1 per cent above the OA interest rate – will remain unchanged at 2.6 per cent per annum.


From the start of next year, CPF members aged 55 and older will earn an additional 1 per cent extra interest on the first S$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 S$60,000 of their combined balances,” said the CPF and the Housing Development Board (HDB) today (Sept 30) in a joint news release.

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 the OA will go into the CPF member’s Special or Retirement Accounts to enhance his or her 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 his or her combined balances, which includes the savings used for CPF LIFE.

Since Jan 1, 2008, savings in the SMRA have been invested in Special Singapore Government Securities, which earned an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities plus 1 per cent.

This is a market-based rate for instruments of comparable risk and duration, and will ensure that CPF members receive “fair and reasonable” interest rates, said the CPF and HDB.