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THE government will extend the 4 per cent minimum interest rate earned on all Special, Medisave and Retirement Account (SMRA) monies for one year until end December 2018.
In a joint media statement, the Central Provident Fund (CPF) Board and the Housing Development Board (HDB) said since January 1, 2008, savings in the SMRA have been invested in Special Singapore Government Securities (SSGS).
SSGS earns an interest rate pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1 per cent. This is a market-based rate for instruments of comparable risk and duration, CPF and HDB said.
To help members cope with the transition, the government had committed to providing a 4 per cent floor rate for SMRA interest for two years up to December 2009. This was subsequently extended in light of global economic conditions and the fact that interest rates had been exceptionally low.
The current 4 per cent minimum rate is due to expire on December 31 this year.
CPF members will continue to earn interest rates of up to 3.5 per cent per annum on their Ordinary Account (OA) monies, and up to 5 per cent per annum on their Special and Medisave Accounts (SMA) monies in the last quarter of 2017.
The OA interest rate will remain at 2.5 per cent per annum from October 1 to December 31 this year, as the computed rate of 0.24 per cent is lower than the legislated minimum interest rate.
Correspondingly, the concessionary interest rate for HDB mortgage loans, which is pegged at 0.1 per cent above the OA interest rate, will remain unchanged at 2.6 per cent per annum from October 1 to 31 December, 2017.
CPF said the SMA interest rate will be maintained at 4 per cent per annum in Q4, as the computed rate of 3.12 per cent is lower than the current floor interest rate of 4 per cent per annum.
It added that the retirement account interest rate will be maintained at 4 per cent per annum in Q4, as announced on November 29 last year.