Interest rates for CPF Special and MediSave, Retirement accounts rise to 4.08% in Q1 2024

SINGAPORE: The interest rate for Central Provident Fund (CPF) Special and MediSave Accounts (SMA), as well as Retirement Accounts (RA), will rise to 4.08 per cent per annum in the first quarter of 2024, said the CPF Board, Housing & Development Board (HDB) and Ministry of Health (MOH) in a joint news release on Wednesday (Dec 6).

The SMA interest rate rise, which is the third such increase in as many quarters, is "due to the increase in the 12-month average yield of 10-year Singapore Government Securities (10YSGS), which the SMA interest rate is pegged to".

The government earlier this year raised SMA interest rates to 4.01 per cent, before increasing it to 4.04 per cent for the fourth quarter of this year.

Meanwhile, the RA interest rate will also be increased to 4.08 per cent for Q1 2024.

“As part of the government’s review of the CPF interest rate pegs, the RA interest rate peg will be aligned to that of the SMA and computed quarterly instead of annually from Jan 1, 2024. Hence, savings in the RA will likewise earn 4.08 per cent in the first quarter of 2024,” said the authorities.

“This change will allow the RA interest rate to be more responsive to the prevailing interest rate environment.”

There will be no change to the SMA and RA floor rate of 4 per cent until Dec 31, 2024, the authorities added.

The Ordinary Account (OA) interest rate will remain unchanged at 2.5 per cent for the same period, as the pegged OA rate remains below the floor rate of 2.5 per cent.

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 CPF Board, HDB and MOH said.

As part of the government’s efforts to enhance retirement savings, CPF members will continue to earn extra interest on their CPF savings.

CPF members below the age of 55 will earn an extra 1 per cent interest on the first S$60,000 (US$44,700) of their combined balances, capped at S$20,000 for the OA.

For CPF members aged 55 and above, the government will pay an extra 2 per cent interest on the first S$30,000 of their combined balances, also capped at S$20,000 for the OA, and an extra 1 per cent on the next S$30,000.

The extra interest received on the OA balances will go into the CPF member’s Special Account (SA) or RA, the authorities said.

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, they added.

As the OA interest rate will remain unchanged at 2.5 per cent in Q1 2024, the concessionary interest rate for HDB housing loans, which is pegged at 0.1 per cent above the OA interest rate, will remain unchanged at 2.6 per cent per annum for the same period.

The rates will apply from Jan 1 to Mar 31.

INCREASE IN BASIC HEALTHCARE SUM

The authorities also announced an increase in the Basic Healthcare Sum (BHS) in 2024. 

From Jan 1, CPF members below 65 years old will have their BHS increased from S$68,500 to S$71,500, while those who turn 65 years old in 2024 will have their BHS fixed at S$71,500 and not change thereafter.

For CPF members aged 66 and above in 2024, their BHS has already been fixed and will remain unchanged, the authorities said.

The BHS is the estimated savings required for basic subsidised healthcare needs in old age. It is adjusted yearly by MOH for those below 65 to keep pace with the growth in MediSave use.

Members can make contributions to the MediSave Account (MA) up to the BHS. MediSave contributions in excess of a member’s BHS will be automatically transferred to his or her other CPF accounts.

CPF members who have less than the BHS are not required to top up their MA and will still be able to withdraw from their MA to pay for approved medical expenses.