Special and MediSave Account interest rate to increase in Q3 2023, other CPF accounts unchanged
THE interest rate for the Special and MediSave Account (SMA) of Central Provident Fund (CPF) members will increase to 4.01 per cent per annum, up from 4 per cent, for the period from Jul 1 to Sep 30.
This is due to an increase in the 12-month average yield of 10-year Singapore Government Securities, which the SMA’s interest rate is pegged to, said the CPF Board and the Housing Board in a joint statement on Monday (May 29).
The Government has maintained a floor interest rate of 4 per cent for the Special, Medisave, and Retirement Accounts since 2008. This is the first time the rate for the SMA has gone above 4 per cent since then.
Meanwhile, the interest rates for the Ordinary Account (OA) and Retirement Account will remain unchanged at 2.5 per cent and 4 per cent respectively per year.
“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 statement.
CPF members below 55 years old will continue to earn an additional 1 per cent interest a year on the first S$60,000 of their combined balances, capped at S$20,000 for the OA.
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Meanwhile, those aged 55 and above will see more interest paid out on their accounts.
On top of receiving an extra 2 per cent interest on the first S$30,000 of their combined balances, capped at S$20,000 for the OA, they will also receive another 1 per cent on the next S$30,000.
The concessionary interest rate for HDB housing loans will also remain unchanged during this period, at 2.6 per cent a year.
The hike in interest rates for the SMA will also correspond with the raising of the monthly salary ceiling for CPF contributions from S$6,000 to S$6,300, which will begin on Sep 1.
The ceiling will be progressively increased to S$8,000 by January 2026, with incremental jumps in January 2024 and January 2025, which Deputy Prime Minister Lawrence Wong announced during his Budget speech on Feb 14.
Wong, who is also the Finance Minister, said the increase in the monthly salary ceiling would help middle-income Singaporeans save more for retirement, while also keep pace with rising salaries.
There will be no change to the annual salary ceiling however, which sets the maximum amount of CPF contributions payable for all wages received in a year.
This is currently set at S$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.
CPF members with enquiries can visit cpf.gov.sg or contact the CPF Board at cpf.gov.sg/writetous. THE STRAITS TIMES
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