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Ultimate Guide to CPF Interest Rates: Latest Rates, Calculation Methodology & Additional CPF Interest Explained

profileKenneth Fong

27 September 2021 Update: Minimum CPF Interest Rates to Remain Unchanged

Central Provident Fund (CPF) has announced that the interest rates for the CPF Ordinary Accounts (OA), Special and MediSave Accounts (SMA) will be maintained until 31 December 2021.

The HDB Concessionary Interest rate will also remain unchanged at 2.6% until 31 December 2021.

As for the Retirement Account (RA), the 4% per annum (p.a.) interest rate will remain unchanged until 31 December 2021 as well.

To sweeten the deal and help CPF members grow their savings…

The Government has also announced that the 4% interest rate floor on Special, MediSave, and Retirement Accounts (SMRA) will be further maintained until 31 December 2022.

Now… this doesn’t really seem like such a big deal because since 1 January 2008, the Government has committed to providing a 4% interest floor rate on our SMRA CPF monies for two-year periods each time.

And they’ve been extending it ever since.

But technically, we shouldn’t take it for granted because it’s not supposed to be like that forever.

I know what you’re thinking…

Source: SpongeBob SquarePants | Giphy

No.

Here’s why this announcement — following CPF’s quarterly interest rate review — is important.

CPF Interest Rates from 1 October 2021 to 31 December 2021

There are no changes to the current CPF interest rates.

 Ordinary Account (Until 31 Dec 2021)Special and MediSave Accounts (Until 31 Dec 2022)Retirement Account (Until 31 Dec 2022)
Interest Rate Floor2.5% p.a.4% p.a.4% p.a.

Interest Rate for CPF Ordinary Account and HDB Mortgage Rate from 1 October 2021 to 31 December 2021

Since the OA interest rate will be maintained at 2.5% p.a. from 1 October to 31 December 2021.

If you’re a home-owner, all you need to know is that the Concessionary Interest Rate for an HDB Mortgage Loan, which is pegged at 0.1% above the OA interest rate, remains unchanged at 2.6% p.a.

Want to take advantage of a home loan package that is lower than 2.6% p.a.?

You might wanna check out the Seedly community to find out more about home loans and get input on topics like whether you should consider refinancing!

Source: SeedlyCommunity

Interest Rate for Special and MediSave Accounts from 1 October 2021 to 31 December 2022

The SMA interest rate will be maintained at 4% p.a. till 31 December 2021.

And as mentioned earlier, the Government will be extending this till 31 December 2022.

Interest Rate for Retirement Account from 1 October to 31 December 2022

The RA interest rate will be maintained at 4% p.a. till 31 December 2021.

The Government will also be extending this till 31 December 2022.


TL;DR: How Are The CPF Interest Rates Calculated?

If you’re wondering how the people at Central Provident Fund (CPF) decide on the interest rates…

No, they don’t just pluck a number from the sky.

Source: SpongeBob SquarePants | Giphy

And no… they don’t throw darts at a piece of paper to randomly choose a number either.

There’s a science to it.

CPF AccountCurrent Interest Rate
(% per annum)
Reviewed?Type of Interest RateInterest Rate determined byInterest Rate
(% per annum)
Ordinary Account2.50QuarterlyFloorLegislated minimum2.50
MarketThree month average of major local banks' interest rates.0.09
Special Account4.00QuarterlyFloorCurrent interest rate floor4.00
Market12-month average yield of 10YSGS + 1%2.18
Medisave Account4.00QuarterlyFloorCurrent interest rate floor4.00
Market12-month average yield of 10YSGS + 1%2.18
Retirement Account4.00YearlyFloorCurrent interest rate floor4.00
MarketWeighted average of entire SSGS portfolio + 1%2.22

Ordinary Account (OA) Interest Rate

Your OA balances earn a legislated minimum interest of 2.5% p.a.

OR the three month average of major local banks’ interest rates, whichever is higher.

Average banks' interest rate
(May to Jul 2021)
0.09%
CPF OA interest rate
(Oct to Dec 2021)
2.50%
(legislated minimum)
Fee to cover cost of loan administration0.10%
HDB mortgage rate
(Oct to Dec 2021)
2.60%

Since the most recent 3-month average yields a pitiful interest rate of 0.09% p.a.

Which is lower than the legislated minimum of 2.5% p.a.

We’ll all receive the 2.5% p.a. instead.

This is reviewed quarterly.

Special and MediSave Account (SA and MA) Interest Rate

Your SA and MA balances earn the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%.

OR the current rate floor of 4% p.a., whichever is the higher.

Average yield of 10YSGS
(Aug 2020 to Jul 2021)
1.18%
Plus 1%1.00%
CPF SMA interest rate
(Oct to Dec 2021)
2.04%
CPF SMA interest rate floor
(Oct to Dec 2021)
4.00%
(current rate floor; extended till Dec 2022)

Since the average yield of the 10YSGS plus 1% from May to July 2021 is 2.18% p.a. which is lower than the current floor interest rate of 4% p.a.

We’ll receive the floor interest rate of 4% p.a. instead.

This is also reviewed quarterly.

Retirement Account (RA) Interest Rate

Your RA interest rate is a little more cheem.

The interest rate is based on the weighted average interest rate of your entire invested portfolio – which is invested in Special Singapore Government Securities (SSGS).

This rate is then adjusted annually in January to take into account the coupon rates payable by the new SSGS issued each year.

Your new RA monies that are credited in 2021 will earn the 12-month average yield of 10YSGS plus 1% computed for the year.

FYI: for November 2019 to October 2020, that works out to be 2.22%.

OR the current floor interest rate, whichever is higher.

Since the amount is lower than the current floor interest rate of 4% p.a.

We’ll receive the floor interest rate of 4% p.a. instead.


What About Additional CPF Interest?

The CPF is a social security system that helps Singaporeans set aside savings for retirement.

So if you put money into it for your future, you best believe that the Government is going to want to help you attain your retirement faster.

Source: SpongeBob SquarePants | Giphy

“How do they do that,” you ask?

By giving you additional CPF interest depending on your age!

Additional CPF Interest For CPF Members Below 55

If you are below 55 years old, you will be paid an extra 1% p.a. on the first $60,000 of your combined balances — with up to $20,000 from your OA.

This means that you will earn 3.5% p.a. a year on your OA monies.

And up to 5% p.a. on your SMA monies.

Additional CPF Interest For CPF Members Above 55

If you are above 55 years old, you will earn an extra 2% p.a. on the first $30,000 of your combined balances — with up to $20,000 from your OA.

And an extra 1% p.a. on the next $30,000.

That works out to be up to 6% p.a. interest per year on your retirement balances.

The extra interest earned on your OA will go into your SA or RA.

If you’re above 55 and are also participating in the CPF LIFE scheme.

The extra interest will still be earned on your combined balances, which includes the savings used for CPF LIFE.

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