Mar 26, 2011
CPF rate peg ensures sustainable return
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WE REFER to the letter by Madam Florence Heng ('Keep CPF rate at 4% next year too'; Tuesday).
Since 2008, the interest earned on Special, Medisave, and Retirement Account (SMRA) monies has been pegged to the 10-year Singapore Government Security (SGS) yield + 1 per cent.
Such a market-based peg ensures that members receive a fair and sustainable return on their Central Provident Fund (CPF) monies. This was one of the measures introduced as part of the 2007 CPF reforms to enhance retirement adequacy.
However, due to the unprecedented global recession and the low interest rate environment in recent years, the Government had introduced and extended a special 4 per cent floor rate for the SMRA up till the end of this year, as previously announced.
As for the extra 1 per cent on the first $60,000 of CPF savings, it is enjoyed by all members and in particular, aims to benefit members with low balances. Members will continue to enjoy this extra 1 per cent interest even after this year.
Farah Abdul Rahim (Ms)
Director, Corporate Communications
Ministry of Manpower
CPF rate peg ensures sustainable return
<!-- by line --><!-- end by line -->
<!-- end left side bar --><!-- story content : start -->
WE REFER to the letter by Madam Florence Heng ('Keep CPF rate at 4% next year too'; Tuesday).
Since 2008, the interest earned on Special, Medisave, and Retirement Account (SMRA) monies has been pegged to the 10-year Singapore Government Security (SGS) yield + 1 per cent.
Such a market-based peg ensures that members receive a fair and sustainable return on their Central Provident Fund (CPF) monies. This was one of the measures introduced as part of the 2007 CPF reforms to enhance retirement adequacy.
However, due to the unprecedented global recession and the low interest rate environment in recent years, the Government had introduced and extended a special 4 per cent floor rate for the SMRA up till the end of this year, as previously announced.
As for the extra 1 per cent on the first $60,000 of CPF savings, it is enjoyed by all members and in particular, aims to benefit members with low balances. Members will continue to enjoy this extra 1 per cent interest even after this year.
Farah Abdul Rahim (Ms)
Director, Corporate Communications
Ministry of Manpower
