By now, you’re probably sick of seeing the word “CPF” as a ton of articles have been written on it in recent weeks.
Here are some notable CPF articles from the past few weeks:
- Your CPF Special Account Might Be Closed
- Changes to CPF Due to Budget 2024
- Nearly $500,000 Worth of CPF Withdrawals Lost to Scams
A real busy month for CPF.
And heck, there’s even a video we’ve done:
If you’re not yet sick of reading about CPF, keep reading to find out more about the slight dip in CPF interest rate in Q2.
Slight Drop in Interest Rate
The interest rate for the Special Account (SA), MediSave Account (MA), and Retirement Account (RA) of CPF members for the period between 1 April and 30 June 2024 (also known as Q2) has been set at 4.05% per annum.
This is slightly below the 4.08% interest rate for the period from 1 January to 31 March 2024 (Q1).
The CPF Board and Housing Development Board said in a joint statement on 12 March 2024 that the interest rate of the three accounts, which is pegged to the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, exceeded the floor rate of 4%.
The government announced last year that the RA interest rate peg would be aligned to that of the SA and MA, and would be computed quarterly instead of annually from 1 January this year. Previously, the RA interest rate peg was not aligned, so RA sometimes had different interest rates then SA and MA.
“Pegged” basically means the interest rate of these three accounts is computed based on the aforementioned 12-month average yield of 10YSGS plus 1%, causing the interest rate to change every quarter.
Manpower Minister Tan See Leng had said in Parliament on 2 August 2022 that “if the pegged rates exceed the floor rates, members will correspondingly earn the higher interest rates on their CPF savings.”
He added that the Government had maintained a floor rate of 4% for the three accounts since 2008.
“The Ordinary Account (OA) interest rate will remain unchanged at 2.5% for the same period, as the OA pegged rate remains below the floor rate of 2.5%.”
“The Government will continue to ensure that the CPF interest rate pegs remain relevant in the prevailing operating environment while taking into consideration the longer-term outlook,” the statement said.
The statement added that as part of the Government’s efforts to enhance the retirement savings for CPF members, CPF members will earn extra interest on their CPF savings.
Members below 55 years old will earn an extra 1% interest on the first $60,000 of their combined balances (capped at $20,000 for OA).
For members aged 55 and above, the Government pays an extra 2% interest on the first $30,000 of their combined balances (capped at $20,000 for OA), and an extra 1% on the next $30,000.
The extra interest received on the OA balances will be channeled into the member’s SA or RA.
If a member is above 55 years old and participates in the CPF LIFE scheme, the extra interest will still be earned on his or her combined CPF balances, which includes the savings used for CPF LIFE.
HDB Concessionary Interest Rate
The concessionary interest rate for HDB housing loans, which is pegged at 0.1% above the OA interest rate, will remain unchanged at 2.6% per annum from 1 April 2024 to 30 June 2024.
For those who wish to compare 2024 Q2’s rates to previous rates, here are the rates for the last three quarters, as well as 2024 Q2:
- 2023 Q3: 2.5% (OA), 4.01% (SA and MA), 4% (RA)
- 2023 Q4: 2.5% (OA), 4% (SA, MA, and RA)
- 2024 Q1: 2.5% (OA), 4.08% (SA, MA, and RA)
- 2024 Q2: 2.5% (OA), 4.05% (SA, MA, and RA)
From the past few quarters, we can observe that the interest rate for OA has not changed. The interest rate for the other three CPF accounts, however, tends to fluctuate slightly.
More about CPF interest rates and how they are computed can be found on CPF’s website.