The Singapore Government has stated that the interest rate floor of 4% on the Central Provident Fund (CPF) Special, Medi Save and Retirement Account (SMRA) monies shall be renewed until the December 31, 2026. This policy will give CPF members secure minimum returns in the low interest rate environment, which will bring retirees financial confidence and consistent expansion in their retirement savings.
This has the following implications on the members of CPF.
– SMRA interest rate is kept at 4 percent per annum, which is above the pegged interest rate based on 12 months average yield of 10-year Singapore Government Securities (10YSGS) in addition to 1 percent. The existing pegged rate is lower than 4 percent, which initiates the floor guarantee.
– The interest rate of the Ordinary Account (OA) will remain at 2.5 per annum, which is also a legislative floor.
– The current rate of the concessionary loan offered by HDB is 2.6% per annum, which is fixed at 0.1% over the OA.
– Members of CPF who are under 55 years will continue to receive an additional 1% interest on the combined amounts of their CPF balances to the first 60,000 USD.
– Members above 55 years will get an additional 2 percent on the first 30,000 and an additional 1 percent on the subsequent 30,000, up to a limit of 20,000 as OA component.
– Additional interest on the OA balances will be transferred to the Special/Retirement Account, which will increase retirement adequacy.
– CPF Life members will keep getting extra interest on their consolidated balances.
| Account Type | Guaranteed Interest Rate | Notes |
|---|---|---|
| Special/MediSave/Retirement Account (SMRA) | 4% p.a. | Floor applies when market peg < 4% |
| Ordinary Account (OA) | 2.5% p.a. | Legislated floor rate |
| HDB Concessionary Loan | 2.6% p.a. | Set at OA + 0.1% |
This extension shows the concern of the government to keep the CPF returns of its members stable and predictable across the varying economic periods so that Singaporeans can comfortably plan their retirement.
FAQs
Q1: Will the floor go beyond 2026?
The policy will be reviewed by the government at the end of 2026 depending on the market conditions.
Q2: Are there different interest rates of all CPF accounts?
No, SMRA is on floor 4.0 per cent; OA is assured of 2.5.
Q3: What is the value of additional interest to older Singaporeans?
It offers further growth to enable it to meet the retirement requirement.
The extension of the 4% CPF floor until the close of the year 2026 will provide the senior citizens in Singapore with the much-needed confidence of financial security in the face of dynamic market forces, further confirming the need to save towards retirement.
