BankBazaar Singapore – December 22, 2017
SINGAPORE: In a recently published Central Provident Fund Board and the Housing & Development Board joint press release, the government agencies have announced measures that they hope will promote savings among the working Singaporeans.
The interest rate for Ordinary Account (OA) and Special and Medisave Accounts (SMA) will remain up to 3.5% p.a. and 5% p.a. respectively, in the period between 1 January and 31 March 2018. CPF members will continue to earn interest at the rate of 5% p.a. on their Retirement Account (RA) during the first quarter of 2018, which remains unchanged from the corresponding period in 2017.
The organisation will continue to pay an additional 1% p.a. interest to its members on the initial S$60,000 of their combined account balance including up to S$20,000 in their OA.
CPF members who are 55 years or older will earn an extra 1% p.a. interest for the initial S$30,000 of their cumulative balance. This will be in excess of the 1% p.a. interest being offered for the first S$60,000 of the cumulative account balance. In essence, it means that members who are 55 years or older will earn an interest of 6% p.a. against 5% offered to other members on their retirement balance.
The additional interest will be credited to the SA or RA accounts of the member to improve their retirement savings. If a member aged 55 and above is part of the CPF Life scheme, they will continue to receive the additional interest on the combined balance.
The OA interest rate will continue to be 2.5% p.a. in the first quarter of 2018 which remains unchanged year-on-year. This is because the computed rate of 0.24% continues to be lower than the regulated minimum rate of interest.
Interestingly, the concessionary rate of interest for HDB home loans will remain stable at 2.6% p.a. for the first quarter of 2018, fixed 0.1% above the minimum OA interest rate.
The minimum interest rate assured on the RA will continue to stay fixed at 4% p.a. for the period between 1 January 2018 and 31 December 2018 in line with the announcement made by the CPFB on 22 September 2017.
The minimum interest rate on the Special and Medisave Accounts of the CPF members will continue to earn a minimum interest of 4% p.a. between 1 January 2018 and 31 March 2018 because the current computed interest rate of 3.2% continues to be lower than the floor interest rate of 4% p.a.
To ensure that a member has enough funds to deal with health issues in the old age, the following changes have been effected:
The higher BHS limit will promote more savings for healthcare in old age.
The cohort BHS has been fixed for members who are 66 years or older in 2018 and will remain the same as last year. Any contributions to the Medisave Account in excess of the BHS will automatically be transferred to other CPF accounts. A member won’t have to top up his Medisave Account if he doesn’t meet the BHS criteria.