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CPF Interest Rate Floor on Special, MediSave and Retirement Account Monies from 1 January 2020 to 31 December 2020

  • One-year extension of minimum 4% interest rate floor on Special, MediSave and Retirement Accounts

 

CPF Interest Rates from 1 October 2019 to 31 December 2019

 

 

  Ordinary Account Special and MediSave Accounts Retirement Account
Interest Rate Floor 2.5% 4% 4%

Computed Rate

(for reference)

0.64% 3.24% 3.38%

Extra Interest of 1%

  • All CPF members earn up to 5% on the first $60,000 of their combined CPF balances

 

Additional Interest of 1%

  • CPF members aged 55 and above earn up to 6% on the first $30,000 of their combined CPF balances.

 

HDB mortgage rate from 1 October 2019 to 31 December 2019

  • Remains unchanged at 2.6%

 

Note: All interest rates are quoted on a per annum basis.

 

In view of the continuing low interest rate environment, the Government has further extended the 4% rate floor for interest earned on all Special, MediSave and Retirement Account (SMRA) monies for another year until 31 December 2020.

 

The Government had committed to providing a 4% rate floor for SMRA interest for two years since 2008, and had subsequently extended the rate floor in light of the global economic conditions and the fact that interest rates had been exceptionally low. The current 4% rate floor is due to expire on 31 December 2019.

 

Please refer to Annex A for more details about the SMRA rate floor.

 

 

CPF Interest Rates for Ordinary, Special and MediSave Accounts from 1 October 2019 to 31 December 2019

 

CPF members will continue to earn interest rates of up to 3.5% per annum on their Ordinary Account (OA) monies, and up to 5% per annum on their Special and MediSave accounts (SMA) monies in the last quarter of 2019. These interest rates include an extra 1% interest paid on the first $60,000 of a member’s combined balances (with up to $20,000 from the OA) which is part of the Government’s efforts to enhance the retirement savings of CPF members.

 

Members aged 55 and above will also earn an additional 1% extra interest on the first $30,000 of their combined balances. This is paid over and above the current extra 1% interest that is earned on the first $60,000 of their combined balances. As a result, members aged 55 and above will earn up to 6% 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) 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.

 

Interest Rate for CPF Ordinary Account and HDB Mortgage Rate

 

The OA interest rate will be maintained at 2.5% per annum from 1 October 2019 to 31 December 2019, as the computed rate of 0.64% is lower than the legislated minimum interest rate of 2.5% per annum.

 

Correspondingly, the concessionary interest rate for HDB mortgage loans, which is pegged at 0.1% above the OA interest rate, will remain unchanged at 2.6% per annum from 1 October 2019 to 31 December 2019.

 

Please refer to Annex B for the detailed computation of the OA interest rate and HDB mortgage rate.

 

 

Interest Rate for Special and MediSave Accounts

 

The SMA interest rate will be maintained at 4% per annum from 1 October 2019 to 31 December 2019, as the computed rate of 3.24% is lower than the current interest rate floor of 4% per annum.

 

Please refer to Annex C for the detailed computation of the SMA interest rate.

 

 

Interest Rate for Retirement Account

 

The RA interest rate will be maintained at 4% per annum from 1 January 2019 to 31 December 2019, as announced on 27 September 2018.

Please refer to Annex D for the detailed computation of the RA interest rate.

 

 

Public Enquiries

 

CPF members can visit cpf.gov.sg or call the CPF Call Centre at 1800-227-1188 for enquiries.

ANNEX A

 

Background information on Special, MediSave and Retirement Account (SMRA) rate floor

 

Since 1 January 2008, savings in the SMRA have been invested in Special Singapore Government Securities (SSGS) which earn an interest rate pegged to the 12-month average yield of 10YSGS plus 1%. 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% rate floor for SMRA interest for two years up to December 2009. This was subsequently extended in view of the global economic conditions and the fact that interest rates had been exceptionally low.

Annex B

 

Computation of CPF OA interest rate and HDB mortgage rate for 1 October 2019 to 31 December 2019

 

The interest rate on OA monies is adjusted quarterly. OA monies earn either the legislated minimum interest of 2.5% per annum, or the 3-month average of major local banks’ interest rates, whichever is higher.

 

Average banks' interest rate from May 2019 to July 2019
0.64% (see note)
CPF OA interest rate for October 2019 to December 2019 2.50% per annum
(legislated minimum rate)
Plus: Fee to cover Cost of Loan Administration 0.10%
HDB mortgage rate for October 2019 to December 2019 2.60% per annum

Note:

 

  12-month deposit rate
(% per annum)
Savings rate
(% per annum)
Average
(% per annum)
Month/
Year
DBS1 OCBC2 UOB3 DBS4 OCBC5 UOB6 Using the 80FD:20SD formula
31 May 2019 1.4000 0.2500 0.7000 0.0500 0.0500 0.0500 0.6367
30 Jun 2019 1.4000 0.2500 0.7000 0.0500 0.0500 0.0500 0.6367
31 Jul 2019 1.4000 0.2500 0.7000 0.0500 0.0500 0.0500 0.6367


1 Balances of $20,000 to < $50,000

2 Balances > $20,000 to $50,000

3 Balances < $50,000

4 Balances > $10,000 to $100,000 (AUTO-SAVE Account)

5 Balances ≤ $100,000 (EASI-SAVE Account)

6 Balances > $15,000 to $100,000 (UNIPLUS Account)

 

Annex C

 

Computation of CPF SMA Interest Rate for 1 October 2019 to 31 December 2019

 

The interest rate on SMA monies is adjusted quarterly. SMA monies earn either the current interest rate floor of 4% per annum or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is higher.

 

Average yield of 10YSGS from August 2018 to July 2019 2.24% (see note)
Plus: 1.00% 1.00%
Computed CPF SMA interest rate for October 2019 to December 2019 3.24%
CPF SMA interest rate for October 2019 to December 2019 4.00% per annum
(current floor rate)

 

 

 

Note:

SMA rates floor vs SMA computed rates

Source: Yields of 10-Year Singapore Government Securities are obtained from www.mas.gov.sg/bonds-and-bills

 

 

 

Annex D

 

Computation of CPF RA Interest Rate for 1 January 2019 to 31 December 2019

 

RA monies credited in 2019 will be invested in newly-issued Special Singapore Government Securities (SSGS) which will earn a fixed coupon rate equal to either the 12-month average yield of the 10YSGS plus 1% computed for the year, or the current rate floor of 4% per annum, whichever is higher.

 

The average yield of the 10YSGS plus 1% from November 2017 to October 2018 is 3.38% per annum. As this is below the current rate floor of 4% per annum, new SSGS issued in the year of 2019 will pay a fixed coupon of 4%.

 

The interest rate earned by RA monies is the weighted average interest rate of the entire portfolio of these SSGS, which is adjusted in January each year to take into account the coupon rates payable by the new SSGS issuance.