The Central Provident Fund (CPF) has announced a reduction in interest rates for the Special, MediSave, and Retirement Accounts (SMRA) to 4% per annum for Q1 2025 (Jan 1 to Mar 31). This marks a decrease from 4.14% in Q4 2024, the first dip after two consecutive increases.
The Ordinary Account (OA) interest rate remains unchanged at 2.5%, while the HDB housing loan rate, pegged at 0.1% above the OA rate, stays at 2.6%.
Reasons for the Decline
The adjustment is attributed to a decrease in the 12-month average yield of 10-year Singapore Government Securities (SGS), which the SMRA rate is pegged to.
Key details:
- The SMRA rate is calculated as 1% above the 10-year SGS yield.
- The average yield from Nov 2023 to Oct 2024 was 2.99%, resulting in a computed rate of 3.99%, which falls below the floor rate of 4%.
Additional CPF Interest
CPF members continue to benefit from extra interest on their savings:
- Below 55 years old:
- Additional 1% interest on the first S$60,000 of combined balances (capped at S$20,000 for OA).
- 55 years old and above:
- Additional 2% interest on the first S$30,000 of combined balances (capped at S$20,000 for OA).
- Additional 1% interest on the next S$30,000.
For members in the CPF LIFE scheme, extra interest applies to the savings used for the scheme, ensuring continued growth in retirement funds.
Updates to the Basic Healthcare Sum (BHS)
The Basic Healthcare Sum (BHS), which represents the estimated savings needed for basic subsidized healthcare in old age, will increase:
- From S$71,500 (2024) to S$75,500 (2025) for members aged below 65.
- Members turning 65 in 2025 will have their BHS fixed at S$75,500 for life.
- For members aged 66 and above in 2025, the BHS remains unchanged.
Contributions to the MediSave Account beyond the BHS will automatically be redirected to other CPF accounts.
Conclusion
Despite the slight dip in interest rates, the CPF system ensures that members’ retirement and healthcare savings continue to grow through floor rates and extra interest incentives. These measures, combined with adjustments like the increase in the Basic Healthcare Sum, underscore CPF’s commitment to securing Singaporeans’ long-term financial well-being.
For more information, visit the CPF website.
