CPF keeps OA interest rate at 2.5%

August 14, 2008
CPF keeps OA interest rate at 2.5%
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.

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.