CPF to extend 4% interest in all accounts until 31 Dec 2011

SINGAPORE : The government has decided to further extend the 4 per cent floor or minimum rate for interest on CPF savings for the Special, Medisave and Retirement Accounts (SMRA) for another year until 31 December 2011 .


This is the second time that it has been extended.

Explaining the move in a statement, Manpower Minister Gan Kim Yong, said that despite Singapore's strong economic recovery, interest rates have remained low this year.

He added that the sharp drop in interest rates at the expiry of the 4 per cent floor rate may impact CPF members who may not have benefited fully from the economic recovery yet.

Since January 2008, SMRA savings have been invested in 10-year Government Securities plus 1%.

This is a market-based rate for instruments of comparable risk and duration, and will ensure that members receive fair and reasonable interest rates.

However, to help members cope with the transition, the government had committed to providing a 4 per cent floor rate for SMRA interest for two years up to December 2009.

This was extended to December 2010, in light of the global economic conditions and exceptionally low interest rate environment a year ago.

Beginning 2012, the interest rates will be subject to a minimum rate of 2.5 per cent per annum. - CNA /ls