Singapore Budget 2015: Extra 1% interest on first S$30,000 of CPF balances from age 55

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CENTRAL Provident Fund (CPF) members will, from the age of 55, get an extra 1 per cent interest on the first S$30,000 of their balances. This will take effect from Jan 1, 2016, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said on Monday.

The additional interest is on top of the existing 1 per cent extra interest provided on the first S$60,000 of balances.

"Hence, given the 4 per cent interest rate on Retirement Account balances, members with lower balances can earn 6 per cent interest," said Mr Tharman.

He shared how around 60 per cent of CPF members aged 55 and older today would earn 6 per cent on their retirement savings, with about 80 per cent earning at least 5 per cent.

For those with lower balances, the additional 1 per cent in extra interest amounts to about a 20 per cent increase in his monthly payout, or about S$40 more each month, for the rest of his life. A person who sets aside the Basic Retirement Sum of S$80,500 in 2016 will see his monthly payout increase by about 6 per cent, said Mr Tharman.

READ MORE: CPF contribution for workers aged 55 and above to go up; CPF salary ceiling to be raised to S$6,000 from S$5,000; CPF salary ceiling to be raised to S$6,000 from S$5,000