Current CPF interest rates higher than market rate pegs: Tan See Leng

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SINGAPORE: Central Provident Fund (CPF) interest rates are pegged to returns on investments of comparable risk and duration in the market, but the Government has maintained higher floor rates and continued to pay generous interest rates despite the low interest rate environment, said Manpower Minister

Dr Tan was responding to parliamentary questions by Mr Henry Kwek and Mr Louis Chua on the CPF interest rate.

The floor interest rate for the Ordinary Account is currently 2.5 per cent, and 4 per cent for the Special, MediSave and Retirement accounts. In the Board’s press release in May on the CPF interest rates from July to September 2022, the local banks’ three-month average interest rate was 0.09 per cent, and it remains at that level based on latest estimates, said Dr Tan.The SMRA interest rates, meanwhile, are pegged to the 12-month average yield of 10-year Singapore Government Securities plus 1 per cent. The peg was 2.72 per cent as of May, and is around 3 per cent based on CPF’s latest estimates.

“If the pegged rates exceed the floor rates, members will correspondingly earn the higher interest rates on their CPF savings.

 

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