The minimum 4 per cent rate on interest earned on all Special, MediSave and Retirement Account (SMRA) funds will be extended for another year, until Dec. 31, 2021.
In a joint statement on Sep. 25, the Central Provident Fund (CPF) Board and the Housing & Development Board (HDB) announced the decision, intended to help CPF members grow their savings.
The government committed to provide a floor of 4 per cent interest on SMRA funds for two years since 2008, owing to global economic conditions and the fact that interest rates had been exceptionally low.
It has been extending the rate yearly since 2010. The current rate floor was due to expire on Dec. 31, 2020.
Interest rates for the rest of the year
The government will make another announcement on the interest rate floor for the Ordinary Account (OA) in 2021 later this year.
For now, the interest rate floor until Dec. 31, 2020 for the Ordinary Account is 2.5 per cent, and 4 per cent for SMRA.
Screenshot from CPF/HDB.
CPF members below 55
But those are just the minimum numbers.
CPF members can earn more interest depending on age.
CPF members below 55 years of age will be paid an extra 1 per cent interest on the first S$60,000 of their combined accounts (with up to S$20,000 from their OA).
This means they will earn 3.5 per cent on their OA money and 5 per cent on their SMRA money in the last quarter of 2020.
CPF members above 55
CPF members older than 55 will earn more, as part of the government effort to boost retirement savings.
They will be paid an extra 2 per cent interest on the first S$30,000 of their combined balances (with up to S$20,000 from the OA), and an extra 1 per cent on the next S$30,000.
Therefore, members aged 55 and above will earn up to 6 per cent interest per year on their retirement balances.
HDB mortgage
As the concessionary interest rate for the HDB mortgage loan is pegged at 0.1 per cent above the OA interest rate, it will be 2.6 per cent for the rest of 2020.
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Top image from CPF Board's Facebook page.