The 4 per cent minimum interest rate on Central Provident Fund (CPF) savings in the Special, Medisave and Retirement accounts (SMRA) will be extended by one year to Dec 31 next year.
The latest extension has been made in view of the uncertainty in the global economy and the low interest rate environment, the CPF Board said on Friday.
Since Jan 1, 2008, these savings have been invested in Special Government Securities which earn an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities (SGS) plus 1 per cent.
Savings in the Special and Medisave accounts earn either 4 per cent or the 12-month average yield of 10-year SGS plus 1 per cent, whichever is higher. New savings in the Retirement account - made up of savings from the Ordinary and Special accounts when one turns 55 - earn an interest rate of either 4 per cent or the same SGS yield, whichever is higher.
From Jan 1, 2015, the SMRA interest rates will be pegged to the SGS yield, subject to a minimum rate of 2.5 per cent a year that applies to all CPF accounts.
When the changes were first announced, the Government committed to giving a 4 per cent minimum interest rate till December 2009 to ease the transition. It has been extended every year since.
The first $60,000 of a CPF member's combined savings earns an additional 1 per cent interest. With the extension, that amount will continue to earn 5 per cent interest.
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