Minimum 4% interest rate for Special, Medisave and Retirement Account monies extended

SINGAPORE — The 4 per cent floor rate for interest earned on all Special, Medisave and Retirement Account (SMRA) monies will be extended for another year until Dec 31, 2017, the Central Provident Fund (CPF) Board and Housing Development Board (HDB) announced in a joint statement on Wednesday (Sept 21).

The move comes in view of “the continuing low interest rate environment”, the statement said.

Savings in the SMRA have been invested in Special Singapore Government Securities (SSGS) since January 2008. These earn an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1 per cent.

The Government had committed to providing a 4 per cent floor rate for SMRA interest up to December 2009, which was subsequently extended in light of global economic conditions and the fact that interest rates had been exceptionally low.

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 Special and Medisave Accounts (SMA) monies in the fourth quarter of 2016. These include an extra 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).

CPF members aged 55 and above will earn an additional 1 per cent extra interest on the first S$30,000 of their combined balances (with up to S$20,000 from the OA) from January 2016, totalling up to 6 per cent interest per year on their retirement balances.

The extra interest received on the OA will go into the member’s Special Account (SA) or Retirement Account (RA). For those above 55 and who have participated in the CPF LIFE scheme, the extra interest would still be earned on his or her combined balances, which includes the savings used for CPF LIFE.

Meanwhile, the OA interest rate will be maintained at 2.5 per cent per annum from Oct 1 to Dec 31, due to the computed rate of 0.24 per cent being 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 OA interest rate) will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31.

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The SMA interest rate would also be maintained at 4 per cent per annum from Oct 1 to Dec 31, as the computed rate of 3.28 per cent is lower than the current floor interest rate of 4 per cent per annum.

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The statement also said RA interest rates would be maintained at 4 per cent per annum from until Dec 31, as previously announced.