Hi anon,
The CPF legislated minimum interest rate is 2.5%. OA monies earn either this legislated minimum interest, or the 3-month average of major local banks' interest rates, whichever is higher. Short of legislation change, this shouldn't change, even in the current low interest rate environment.
For CPF MA and SA, the rates are reviewed quarterly. Monies here earn the current floor interest rate of 4% per annum or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is higher. The government has decided to further extend the 4% floor rate for interest earned on all SA/MA monies for another year until 31 December 2020.
For RA, the interest is reviewed annually. RA monies credited each year will be invested in newly-issued Special Singapore Government Securities (SSGS) which will earn a fixed coupon rate equal to either the 12-month average yield of the 10YSGS plus 1% computed for the year, or the current floor rate of 4% per annum, whichever is higher. Again, the government has decided to further extend the 4% floor rate for interest earned on the RA for another year until 31 December 2020.
The worst case scenario is that this 4% p.a. for SA/MA/RA isn't feasible in the long run and it gets reduced to 2.5% p.a.
Hi anon,
The CPF legislated minimum interest rate is 2.5%. OA monies earn either this legislated minimum interest, or the 3-month average of major local banks' interest rates, whichever is higher. Short of legislation change, this shouldn't change, even in the current low interest rate environment.
For CPF MA and SA, the rates are reviewed quarterly. Monies here earn the current floor interest rate of 4% per annum or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is higher. The government has decided to further extend the 4% floor rate for interest earned on all SA/MA monies for another year until 31 December 2020.
For RA, the interest is reviewed annually. RA monies credited each year will be invested in newly-issued Special Singapore Government Securities (SSGS) which will earn a fixed coupon rate equal to either the 12-month average yield of the 10YSGS plus 1% computed for the year, or the current floor rate of 4% per annum, whichever is higher. Again, the government has decided to further extend the 4% floor rate for interest earned on the RA for another year until 31 December 2020.
The worst case scenario is that this 4% p.a. for SA/MA/RA isn't feasible in the long run and it gets reduced to 2.5% p.a.