SINGAPORE: The Basic Healthcare Sum for Central Provident Fund (CPF) members will be adjusted upwards from January 2023 - from S$66,000 to S$68,500.
This was announced on Thursday (Dec 1) in the quarterly update on CPF interest rates, which remain unchanged for the first quarter of 2023.
However, the Government said it will closely monitor the interest rate environment.
"The Government is watching the interest rate environment closely to ensure that the CPF interest rate pegs remain relevant in the prevailing operating environment while taking into consideration the longer-term outlook," said the Board, Housing and Development Board (HDB) and the Ministry of Health in a joint press release.
The Basic Healthcare Sum (BHS), a cap applied to the MediSave Account, is the estimated savings required for basic subsidised healthcare needs in old age.
It is adjusted yearly for members below 65 to keep pace with the growth in MediSave use, but once members reach age 65, their BHS will be fixed for the rest of their lives.
Thus the current rise in BHS does not affect CPF members aged 66 and above. And for members who turn 65 years old in 2023, their BHS will be fixed at S$68,500.
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 MediSave Accounts and will still be able to withdraw from their accounts to pay for approved medical expenses, the press release stated.
CPF INTEREST RATES UNCHANGED
CPF floor interest rates remain at 2.5 per cent for the Ordinary Account and 4 per cent for the Special Account, the Retirement Account and the MediSave Account from Jan 1 to Mar 31, 2023.
Correspondingly, the concessionary interest rate for HDB housing loans will remain unchanged at 2.6 per cent for the first quarter. The HDB housing loan rate is pegged at 0.1 per cent above the Ordinary Account interest rate.
The CPF Board said that despite rising interest rates globally, the pegged interest rates remain below the floor rates. CPF interest rates have not changed for 23 years, since July 1999.
The Ordinary Account pegged rate for January to March 2023 is 0.21 per cent and that for the other accounts is 3.47 per cent, according to the CPF website.
The Ordinary Account interest rate is pegged to the three-month average fixed deposit and savings rates of three major local banks - DBS, UOB and OCBC.
The interest rate for the other accounts is pegged to the 12-month average yield of 10-year Singapore Government Securities plus 1 per cent.
Members also get an extra 1 per cent interest paid on the first S$60,000 of members’ combined balances, capped at S$20,000 for the Ordinary Account.
This means CPF members below 55 years old earn interest rates of up to 3.5 per cent per annum on their Ordinary Account, and up to 5 per cent on their Special or Retirement Account.
"The extra interest paid to CPF members is part of the Government’s efforts to enhance the retirement savings of CPF members," said the CPF Board.