Rate floor for interest on SMRA extended until end-2020

The minimum 4% rate will expire on 31 December 2020.

The Singapore government has further extended the 4% rate floor for interest earned on all Special, MediSave and Retirement Account (SMRA) for another year until 31 December 2020, according to a joint announcement by the Central Provident Fund Board and the Housing and Development Board.

The current 4% rate was previously due to expire on 31 December 2019.

The government had provided a 4% rate floor for SMRA interest for two years since 2008, and had subsequently extended the rate floor in light of the global economic conditions and the fact that interest rates had been exceptionally low, the joint release said.

CPF members will continue to earn interest rates of up to 3.5% per annum on their ordinary account (OA) and up to 5% per annum on their special and MediSave accounts (SMA) monies in the last quarter of 2019. These interest rates include an extra 1% interest paid on the first $60,000 of a member’s combined balances (with up to $20,000 from the OA).

Members aged 55 and above will also earn an additional 1% extra interest on the first $30,000 of their combined balances, paid over and above the current extra 1% interest that is earned on the first $60,000 of their combined balances. As a result, members aged 55 and above will earn up to 6% interest per year on their retirement balances.

The extra interest received on the OA will go into the member’s special account (SA) or retirement account (RA) to enhance his or her retirement savings.

The joint release also clarified that the OA interest rate will be maintained at 2.5% per annum until 31 December, as the computed rate of 0.64% is lower than the legislated minimum interest rate of 2.5% per annum.

The concessionary interest rate for HDB mortgage loan will also remain unchanged at 2.6% per annum until the end of the year.

In addition, the SMA interest rate and the RA interest rate will both be maintained at 4% per annum until the end of the year.