Thursday, August 14, 2008

CPF Keeps OA Interest Rate At 2.5%

Source : The Business Times, August 14, 2008

Concessionary rate for HDB mortgage loans remains 2.6%

THE Central Provident Fund Board (CPF) will continue to pay 2.5 per cent interest per annum for members' savings in their Ordinary Account (OA) from Oct 1 to Dec 31.

Savings: The interest rate for the Special, Medisave and Retirement accounts (SMRA) for October to December will be announced next month

CPF said that although its computed interest rate derived from the rates of major local banks for the period May 1 to July 31 works out to be 0.74 per cent per annum, the higher rate of 2.5 per cent will be paid because that is the minimum specified under the CPF Act.

The Housing and Development Board (HDB), meanwhile, has announced that the concessionary interest rate for HDB mortgage loans, pegged at 0.1 of a percentage point above the CPF interest rate for the OA, will remain unchanged at 2.6 per cent per annum from Oct 1 to Dec 31.

The interest rate for Special, Medisave, and Retirement accounts (SMRA) for October to December will be announced next month.

The prevailing CPF interest rate for SMRA is 4 per cent, based on the 12-month average yield of the 10-year Singapore Government Security plus one per cent.

To help members adjust to this floating rate, the 4 per cent floor for the SMRA rate will be maintained for the first two years, as earlier announced.

An extra one per cent interest will continue to be paid on the first $60,000 of a member's combined balances, with up to $20,000 from the OA.

The extra interest from the OA will go into members' Special or Retirement accounts to enhance their retirement savings.

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