facebookUltimate CPF Interest Rates (2024) Guide: Rates, Calculation Methodology & Additional CPF Interest

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061223 CPF Interest Rates 2024

Ultimate CPF Interest Rates (2024) Guide: Rates, Calculation Methodology & Additional CPF Interest

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6 Dec 2023 Update: Special and MediSave Accounts Interest Rate to Increase to 4.08% In Q1 2024

Breaking news from the Central Provident Fund (CPF) board.

With the Special and MediSave Account (SMA) pegged rate exceeding the floor rate of 4%, savings in the SMA will earn 4.08% in the first quarter of 2024. This is due to the increase in the 12-month average yield of 10-year Singapore Government Securities (10YSGS), which the SMA interest rate is pegged to. In addition, the interest rate for the Retirement Account (RA) will go up to 4.08% for the same time period.

But, there will be no change to the SMA and RA floor rate of 4% until 31 December 2024, as announced on 21 September 2023.

Whereas the Ordinary Account (OA) interest rate will remain unchanged at 2.5% for the same period, as the pegged OA rate remains below the floor rate of 2.5%. The Government will continue to ensure that the CPF interest rate pegs remain relevant in the prevailing operating environment while considering the longer-term outlook.

As such, the Housing and Development Board (HDB) Concessionary Interest rate, which is pegged at 0.10% above the OA interest rate, will remain unchanged at 2.6% per annum (p.a.) for Q1 2024.

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


TL;DR: CPF Interest Rates (1 January 2024 – 31 March 2024) — What Are the Changes to CPF in 2024

Here are the upcoming changes to the CPF interest rates:

 Ordinary Account (1 January 2024 – 31 March 2024)Special and MediSave Accounts (1 January 2024 – 31 March 2024)Retirement Account (1 January 2024 – 31 March 2024)
Interest Rate Floor2.50% p.a.4.08% p.a.4.08% p.a.

Source: CPF

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CPF OA Interest Rate and HDB Mortgage Rate (1 January 2024 – 31 March 2024)

Since the OA interest rate will be maintained at 2.50% p.a. from 1 January 2024 to 31 March 2024.

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 0.10% above the OA interest rate (charged as a loan distribution fee), remains unchanged at 2.60% p.a. for the same time period in Q1 2024.

Want the lowdown of all things property?

You might want to check out the property group on Seedly to learn more about home loans and more.

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MediSave and Special Account CPF Interest Rate (1 January 2024 – 31 March 2024)

The SMA interest rate will be increased to 4.08% from 1 January 2024 to 31 March 2024

This is up from the previous quarter, where the rate was 4.04% p.a. from 1 October 2023 to 31 December 2023.

CPF Interest Rate History

This increase is history in the making as this is the first and second time the CPF SMA account interest rate has been increased since the floor rate of 4.0% p.a. was first established in 2008.

Also, you might be wondering. How much more will you get with the increased interest for 2023 when the interest is credited on 1 January 2024?

Let me show it with an example.

For context, CPF has stated that:

CPF interest is computed monthly. It is credited to your respective accounts by 1 January of the following year and compounded annually.

CPF balances used for interest computation are affected by the transactions in your account. For instance, contributions (including refunds) received this month start earning interest next month. Withdrawals/deductions in this month will not earn interest from this month onwards.

This means that at the end of the year, you will get interest on the average weighted balance in your CPF account for the whole year.

Let’s say you have $100,000 in your SA and have maintained this amount for the whole year without any withdrawals.

Since CPF interest for the SA is increasing to 4.04% p.a. in Q4 2023, this means that the blended interest rate for the entire year would be 4.0125% [(4.0% + 4.0% + 4.01% + 4.04%)/4].

This means you’ll get just $4,012.50 in interest credited to you on 1 January 2024, which means you will have $104,012.50 in your CPF SA after 1 January 2024.

If you compare it to last year’s interest rate, where interest for the SA is 4.0% p.a. for 2022, you will have $4,000 in interest credited to you on 1 January 2023, which means you will have $104,000 in your CPF account.

In other words, you’ll get $12.50 more with the 2023 increase.

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Retirement Account Interest (1 January 2024 – 31 March 2024)

The RA interest rate will be increased to 4.08% p.a. from 1 January 2024 to 31 March 2024.

But as announced on 21 September 2023, there will be no change to the SMA and RA floor rate of 4.00% until 31 December 2024.

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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)
Rate of ReviewType of Interest RateInterest Rate Determined By?Current Interest Rate
(% p.a.)
Ordinary Account2.50QuarterlyFloorLegislated minimum2.50%
MarketThree month average of major local banks' interest rates0.66% for the period from Aug 2023 to Oct 2023
Special Account4.00QuarterlyFloorCurrent interest rate floor4.00%
MarketAverage yield of 10YSGS + 1%4.08% for the period from Nov 2022 to Oct 2023
Medisave Account4.00QuarterlyFloorCurrent interest rate floor4.00%
MarketAverage yield of 10YSGS + 1%4.08% for the period from Nov 2022 to Oct 2023
Retirement Account*4.00YearlyFloorCurrent interest rate floor4.00%
MarketAverage yield of 10YSGS + 1%4.08% for the period from Nov 2022 to Oct 2023

*From 1 January 2024, the RA interest rate peg will be aligned to that of the SMA and computed quarterly instead of annually. This change will allow the RA interest rate to be more responsive to the prevailing interest rate environment. Correspondingly, the SMA computed rate will be applicable to the RA from 1 January 2024.

If you’re wondering why the CPF interest rates took so long to go up when interest rates of Singapore Savings Bonds and Fixed Deposits have shot up, CPF’s official response was that the Government has extended the 4% floor rate on SMRA interest:

CPF interest rates have been pegged to market instruments of comparable risk and duration to ensure that members receive fair and reasonable returns. While the recent rise in interest rates have led to an increase in the pegged SMRA rates, they remain below the floor rate of 4%. To help members grow their savings consistently, the Government will be extending the 4% floor rate on SMRA interest. The SMRA rates will continue to be reviewed regularly and CPF members will earn the higher of the floor or pegged rate.

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 2023 to July 2023)
0.66%
CPF OA interest rate
(1 October 2023 to 31 December 2023)
2.50%
(legislated minimum)
Fee to cover cost of loan administration0.10%
HDB mortgage rate
(1 October 2023 to 31 December 2023)
2.60%

Since the most recent 0.66% 3-month average yields for the period from August 2023 to October 2023 yield a pitiful interest rate of 0.66% p.a.

We’ll all receive the 2.5% p.a. from our CPF OA as the yields are lower than the legislated minimum of 2.5% p.a.

This is reviewed every quarter.

Special and MediSave Account 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.

12-Month Average Yield of 10YSGS
(August 2022 to July 2023)
3.04%
Plus 1%1.00%
CPF SMA interest rate
(1 October 2023 to 31 December 2023)
4.04%
CPF SMA interest rate floor
(1 October 2023 to 31 December 2023)
4.00%
(current rate floor; extended till Dec 2024)

And since the average yield of the 10YSGS plus 1% from November 2022 to October 2023 is 4.07% p.a., which is higher than the current floor interest rate of 4.00% p.a. This is why we’ll receive a higher interest rate of 4.08% p.a. for Q1 2024.

Like the OA interest rate the SMA rate will also be reviewed quarterly.

CPF Special Account Ceiling 2023

And if you were wondering, there is no cap on the amount you can have in your CPF SA.

But, there is a cap to how much you can top up to your SA or RA.

Top-ups will be made to the SA if the recipient is below 55 years old and the RA if the recipient is 55 years old or above.

The top-up limit is the maximum top-up amount a recipient can receive in his CPF account. The limit is computed based on the recipient’s CPF savings:

CPF 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 account for the coupon rates payable by the new SSGS issued each year.

Your new RA monies that are credited in 2023 will earn the 12-month average yield of 10YSGS plus 1% (3.47% p.a. for the period from November 2021 to October 2022) computed for the year.

OR the current floor interest rate, whichever is higher.

Since 3.47% p.a. is lower than the current floor interest rate of 4.00% p.a.

We’ll receive the floor interest rate of 4.00% p.a. instead.

But from 1 January 2024, the RA interest rate peg will be aligned to that of the Special and SMA and computed quarterly instead of annually. This change will allow the RA interest rate to be more responsive to the prevailing interest rate environment. Correspondingly, the SMA computed rate will apply to the RA from 1 January 2024.

This is why, from 1 January 2024, we will receive 4.08% p.a. on our RA savings.

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How Can I Maximise My CPF Money: Additional CPF Interest and CPF Contribution Rate Explained

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 at these CPF contribution rates:

“How do they do that,” you ask?

By giving you additional CPF interest depending on your age!

Source: CPF

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 up to 3.5% p.a. a year on your OA monies.

And up to 5% p.a. on your SA and MA 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.

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.

That’s a CPF tip you need to know for sure.

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