The SMRA rates of interest, meanwhile, are chosen to the 12-month typical yield of 10-year Singapore Government Securities plus 1 per cent. The peg was 2 . 72 per cent as of May, and is around 3 per cent based on CPF’s latest estimations.
As these are below the floor rates intended for CPF accounts, the interest rates for the Regular Account and SMRA are maintained at 2 . 5 percent and 4 % respectively.
“Despite the low-interest rate environment since the worldwide financial crisis, the Government provides continued to pay generous interest rates due to the flooring rates, ” stated Dr Tan.
“If the chosen rates exceed the floor rates, members will correspondingly earn the greater interest rates on their CPF savings.
“Members can also transfer their particular Ordinary Account monies to the Special or even Retirement Account to earn the higher risk-free rate, ” he added. “I want to emphasise, this is free of risk. ”
RATES FOR THE LONG TERM: MINISTER
Mr Chua inquired in a supplementary issue what would be the challenge for the Government to think about granting extra interest rates. He also mentioned that local banking institutions have raised interest rates for their savings balances in recent times, and asked issue would prompt the CPF Board to review its pegging formula.
Dr Color said that the CPF system is aimed at giving members better safety in retirement on the long term and in senior years, while the bank accounts talked about by Mr Chua are short-term, volatile instruments.
“The CPF interest rates . continue to be attractive, ” said Dr Tan, reiterating that CPF floor rates are higher than the rates they are pegged in order to.
The minister also pointed out that CPF rates have no more conditions attached, as the promotional rates for your banks’ accounts are contingent on the customers fulfilling criteria like minimum spending on bank cards, or crediting of salaries into their balances.
“These advantages are not uniformly applicable to all balances of all of the depositors, ” this individual said.
The CPF interest rates are usually reviewed periodically. The interest rates on the Common Account, Special Account, and MediSave Accounts are reviewed quarterly, while the interest rate in the Retirement Account is reviewed annually.