Starting from the third quarter of this year, Singaporeans can look forward to an increased interest rate for their Central Provident Fund (CPF) Special and MediSave Account (SMA).
According to a joint press release by CPF and the Housing and Development Board (HDB) on Monday (29 May), the interest rate for SMA will rise to 4.01% per annum.
The interest rates for the other CPF accounts will remain unchanged.
Per the statement, the SMA interest rate will rise to 4.01% per annum from 1 Jul to 30 Sep.
The increase in SMA interests is due to the rise in the 12-month average yield of 10-year Singapore Government Securities (10YSGS). As the SMA is pegged to the 10YSGS, the interest rate increases accordingly.
The interest rate for the CPF Ordinary Accounts (OA) will remain the same during that period, at 2.5%.
This is because the OA rates remain below the floor rate pegged to the 10YSGS.
CPF members who have yet to reach 55 years of age will continue earning an additional 1% interest on the first S$60,000 of their combined balances. This is capped at S$20,000 for the OA.
Those 55 and above will earn an extra 2% interest on the first S$30,000 of their combined balances. For the next S$30,000, they will get an additional 1% interest. This is also capped at S$20,000 for the OA.
The extra interest received on the OA will then go into their Special Account (SA) or Retirement Account (RA).
For participants of the CPF LIFE scheme who are 55 and above, the extra interest will still apply to their combined balances. This includes the savings used for CPF LIFE.
Source: Google Maps
Similarly, the concessionary interest rate for HDB housing loans will remain unaltered at 2.6% per annum for the same period.
The interest rate for the Retirement Account (RA) will stay at 4% from 1 Jan to 31 Dec.
The statement added that the Government is closely monitoring the interest rate environment. This ensures that the rates remain relevant while considering the longer-term outlook.
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Featured image adapted from Google Maps.
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