Historical CPF Interest Rates
CPF was set up on 1 July 1955. Since its inception, interest rates on CPF funds have fluctuated. See below a snapshot of CPF interest rates from 1996 to 1999. You will see that interest rates peaked in 1H 1999 but since then has been constant at 2.5%pa. The reduction in interest rate since 1999 up to now is in line with global economic conditions leading to governments across the world reducing interest rates to spur economic growth.
However, is the era of cheap money over? Will CPF raise interest rates in line with the broader market? We will have to wait and see. In the meantime, we can explore other low risk means of increasing returns on OA such as investing in T - bills and SSBs (see next blog)
| 1st Half 1996 | 2nd Half 1996 | 1st Half 1997 | 2nd Half 1997 | 1st Half 1998 | 2nd Half 1998 | 1st Half 1999 | 2nd Half 1999 | OA - Interest Rate (pa) | 3.52% | 3.48% | 3.48% | 3.48% | 3.48% | 4.29% | 4.41% | 2.5%* |
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Source: www.sgmoneymatters.com
Current Interest Rates on Ordinary and Special Accounts after 55 yo
For members who have the Full Retirement Sum in their CPF Account, the interest rates applicable on their CPF are as follows:
| Ordinary Account (OA) | Special Account (SA) | OA - Interest Rate (pa) | 2.5% | 4.0% |
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There are no additional special interest rates on the Ordinary and Special Accounts after 55 yo.
The floor rate of 4% on SA, RA and MA is applicable up to 31 Dec 2023 after which it will be reviewed.
On CPF withdrawals after 55 yo
As per CPF website, once we hit 55 years old and have the full retirement sum in the Retirement Account ("RA"), we can withdraw up to 100% from the Ordinary Account and Special Account. If you have a fully paid property with a remaining lease that can last till you are at least 95 yo, then you only need to set aside the Basic Retirement Sum in the Retirement Account.
However, any sums withdrawn from CPF will be withdrawn first from the Special Account. Please note that the SA pays a higher interest rate than the ordinary account. The difference in interest rate is 1.5% which means that if moneys are withdrawn first from the special account, you will lose the higher interest rate that the SA enjoys.
Some CPF account holders have been actively buying T-bills and SG bonds using the funds in their OA. As the T-bills are currently issued at around 3.88% (as of 8 Feb 2023), it would raise the interest income enjoyed in the OA as the OA currently only pays interest at 2.5% pa.
Maturing of Insurance Policies bought with CPF moneys
If you have bought endowment or other life policies with moneys from CPF ordinary account, then on maturity of the policy, the cash proceeds shall be returned to the OA account. You are free to withdraw such funds after age 55 yo but only after you have exhausted the sums in the SA. Such moneys in the OA can also be used to fully repay your housing loans and purchase CPF approved securities.