SINGAPORE - The interest rates for various Central Provident Fund (CPF) accounts will remain unchanged in the second quarter of 2023, despite the rise in bank interest rates and cost of living in recent months.
From April 1 to June 30, CPF members below 55 years old will continue to earn interest rates of up to 3.5 per cent per year on their Ordinary Account (OA), and up to 5 per cent per year on their Special and MediSave accounts.
These interest rates include the extra 1 per cent interest on the first $60,000 of their combined balances, capped at $20,000 for the OA, said the CPF Board and the Housing Board in a joint statement on Friday.
Meanwhile, members above the age of 55 will continue earning up to 6 per cent interest a year on their combined balances.
This includes the extra 2 per cent interest on the first $30,000 of their combined balances, capped at $20,000 for the Ordinary Account, and an extra 1 per cent on the next $30,000.
The concessionary interest rate for HDB housing loans will also remain unchanged during this period, at 2.6 per cent a year.
Amid the rise in cost of living, some have called for CPF interest rates to be raised, in line with inflationary pressures and banks raising their interest rates.
However, Manpower Minister Tan See Leng said in Parliament last August that there would be no changes, citing how current bank interest rates still fell below the effective CPF floor rates.
The current floor rates stand at 2.5 per cent for the Ordinary Account, and 4 per cent for the Special, MediSave and Retirement accounts.
“The Government is watching the interest rate environment closely to ensure that the CPF interest rate pegs remain relevant in the prevailing operating environment while taking into consideration the longer-term outlook,” said the joint statement.
But, from September onwards, some CPF members will see their accounts grow more, with the raising of the monthly salary ceiling for CPF contributions to $6,300 from $6,000.
The ceiling will be increased to $6,800 from January 2024, $7,400 from January 2025 and $8,000 from January 2026.
Deputy Prime Minister Lawrence Wong, who is also Finance Minister, announced this increase during his Budget speech on Feb 14, citing how it would help middle-income Singaporeans save more for their retirement and keep pace with rising salaries.
However, there would be no change to the annual salary ceiling, which sets the maximum amount of CPF contributions payable for all wages received in a year.
This is currently set at $102,000 and includes both ordinary wages and additional wages.
Those who are working and aged above 55 to 70 will also see more in their Special Accounts from Jan 1, 2024, when the CPF contribution rates by employees and employers are raised by up to 1.5 percentage points.
For more information on CPF interest rates and their computation, go to cpf.gov.sg/CPFInterestRates
