According to the announcement by the Singapore government, the minimum interest rate floor of 4% that applies on Central Provident Fund (CPF) Special, MediSave, and Retirement Account (SMRA) balances is extended to December 31, 2026. This extension will give CPF members, particularly the retired people and those about to retire greater confidence and more stability on their retirement and healthcare savings in a low interest rate environment across the globe.
Major CPF Interest Rate Floor Extension Essentials
– 4% floor entails CPF SMRA balances making an annual earning of no less than 4 percent.
– This warranty will be provided between January 1, 2025, and December 31, 2026, which gives two additional risk-free years of stable returns.f
– 4% SMRA interest rate is fixed to a average yield of 10-year Singapore Government Securities plus 1% buffer- as of today, the floor is below 4% hence the floor is applicable.
Ordinary Account (OA) balances will remain at a floor rate of 2.5 per annum.
– HDB housing loans with concessed interest rates stand at a constant of 2.6%.
Other Interest Benefits
– CPF members with balances below 55 years receive an additional 1 percent on the combined total CPF balances (up to $20,000 of OA).
– Any member aged 55 or older will get an addition of 2 per cent interest on the first 30,000 and an addition of 1 per cent on the next 30,000 of combined balances.
– Further interest on OA balances charged to Special or Retirement Accounts.
– CPF LIFE members are still entitled to earn more interest on the balances deposited to CPF LIFE schemes, which aim at risk-free returns of up to 6 percent per annum pegged on 4 percent floor.
The Reason this Extension is Significant to Retirees
The retirees and the nearing retiree can have a certain level of security on the minimum yield on their retirement savings in Singapore without affecting the global interest rates. This safeguards the purchasing power and assists the retired in better planning their retirement and health care funding. The extension depicts the willingness of the government to ensure that CPF members remain financially secure even in the face of the unpredictable economy.
CPF 4% Interest Floor Extension Summary
| Aspect | Details |
|---|---|
| Interest Rate Floor | 4% per annum on SMRA balances |
| Extension Period | January 1, 2025 – December 31, 2026 |
| OA Interest Rate Floor | 2.5% per annum |
| Extra Interest for 55+ | +2% on first $30,000, +1% on next $30,000 |
| HDB Loan Concessionary Rate | 2.6% per annum |
FAQs
Q1. What is the 4% CPF floor of interest?
It ensures that at least the CPF Special, the MediSave and the Retirement Accounts receive at least 4% interest each year despite the market rates being lower.
Q2. Who is going to gain the most on this extension?
CPF members near or retired but use SMRA accounts to finance their retirement and healthcare benefits.
Q3. Are Ordinary Account interest rates as well guaranteed?
Yes, the Ordinary Account still earns not less than 2.5 percent per annum.
