SINGAPORE - The 4 per cent minimum interest rate on Central Provident Fund (CPF) savings in the Special, Medisave and Retirement accounts (SMRA) will be extended to Dec 31 next year. The CPF Board said that this was in view of the uncertainty in the global economy and low interest rate environment. It was meant to expire at the end of this year.
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Full details available in the CPF Board's full release here:
MINIMUM 4 per cent INTEREST RATE FOR SPECIAL, MEDISAVE AND RETIREMENT ACCOUNT MONIES TO BE EXTENDED UNTIL 31 DECEMBER 2014
One-Year Extension of 4 per cent Floor Rate for all SMRA Monies
Since 1 January 2008, savings in the Special, Medisave and Retirement Account (SMRA) have been invested in Special Singapore Government Securities (SSGS) which earn an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1 per cent. 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 per cent floor rate for SMRA interest for two years up to December 2009. This was subsequently extended in light of global economic conditions and the fact that interest rates had been exceptionally low. The 4 per cent floor rate is currently due to expire on 31 December 2013.
In view of the uncertainty in the global economy and low interest rate environment, the Government has decided to further extend the 4 per cent floor rate for interest earned on all SMRA monies for another year until 31 December 2014. SMRA monies within the first $60,000 of a member's combined balances will therefore continue to earn a 5 per cent interest rate.
From 1 January 2015, the SMRA rates will be pegged to the 12-month average yield of 10YSGS plus 1 per cent, subject to the statutory floor rate of 2.5 per cent per annum that applies to all CPF accounts.
CPF Interest Rate for Special and Medisave Accounts from 1 October 2013 to 31 December 2013 CPF members will continue to enjoy a risk-free interest rate of 4 per cent on their Special and Medisave Accounts (SMA) from 1 October 2013 to 31 December 2013, as the 12-month average yield of 10YSGS plus 1 per cent from 1 September 2012 to 31 August 2013 works out to be 2.68 per cent, which is below the current floor of 4 per cent.
This is in line with the Government's announcement made in September 2012 to maintain the 4 per cent p.a. floor rate for interest earned on all SMA monies and Retirement Account (RA) monies until 31 December 2013.