I was surprised from
recent conversations with many people that they are not aware that their CPF
SMRA (Special, Medisave and Retirement Accounts) will no longer earn the floor interest
rate of 4% from 1 Jan 2016!
Actually, this floor
rate of 4% would have been terminated long ago if not for the extension by
Singapore Government every year since 1 Jan 2010!
From 1 Jan 2016, SMRA
will only receive a floating rate equal to the 12-month average yield of
10-year Singapore Government Securities (10YSGS) plus 1%.
At the moment, 10YSGS
is hovering around 2.1-2.5% only, so SMRA monies will earn 3.1-3.5% only if the
4% floor rate has been removed.
On the other hand, Savings
in the OA will continue to earn either the legislated minimum 2.5% per annum or
the 3-month average of major local banks’ interest rates, whichever is higher.
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