CPF interest rates on Special and Medisave accounts stay at 4 per cent

Interest rates on Central Provident Fund (CPF) Special and Medisave Accounts (SMA) will stay at 4 per cent in the third quarter of this year, the CPF board announced on Tuesday.

Keeping the rate steady is in line with the government’s announcement last year to maintain the 4 per cent per annum floor rate for interest earned on all SMA monies and Retirement Account (RA) monies until the end of this year, the board added.

Savings in the SMA currently earn either 4 per cent per annum or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1 per cent, whichever is the higher.

The four the average yield of the 10-year securities between June 2013 and May 2014 was 2.42 per cent, so the total of 3.42 per cent was lower than 4 per cent.

Interest rates for CPF Special and Medisave accounts are announced and adjusted every quarter, so this round's interest rate applies for the period between 1 July and 30 September this year.

The government will continue to pay an additional 1 per cent interest on the first $60,000 of a CPF account holder's combined balances -- or 3.5 per cent on the first $20,000 in a person's Ordinary Account and 5 per cent on the first $40,000 on his or her Special, Medisave and Retirement Account savings.