CPF members' interest rates to be fixed from Jan 2023
The Basic Healthcare Sum for Central Provident Fund CPF members will be adjusted from January 2023 to S $66,000 to $68,500.
The quarterly update on CPF interest rates was announced on December 1 in the Quarterly update on interest rates, which remain the same for the first quarter of 2023.
The Government said it will closely monitor the interest rate environment.
The Government is watching the interest rate environment closely to make sure that the CPF interest rate pegs remain relevant in the prevailing operating environment while taking into account the longer-term outlook, said the Board, Housing and Development Board HDB and the Ministry of Health in a joint press release.
The Basic Healthcare Sum BHS cap, applied to the MediSave Account, is the estimated savings needed for basic subsidised healthcare needs in old age.
It is adjusted yearly for members less than 65 to keep pace with the growth in MediSave use, but once members reach age 65 their BHS will be fixed for the rest of their lives.
The current rise in BHS does not affect CPF members aged 66 and above. For members who turn 65 years old in 2023, their BHS will be fixed at S $68,500.
MediSave contributions in excess of a member's BHS will be automatically transferred to his or her other CPF accounts.
CPF members with less than the BHS are not required to top up their MediSave Accounts, but they will be able to withdraw from their accounts to pay for approved medical expenses, according to the press release.
The CPF floor interest rates remain at 2.5 per cent for the Ordinary Account and 4 per cent for the MediSave Account, the Retirement Account and the Special Account from Jan 1 to Mar 31, 2023.
The concessional interest rate for HDB housing loans will remain unchanged at 2.6 per cent for the first quarter. The HDB housing loan rate is 0.1 per cent higher than the Ordinary Account interest rate.
The CPF Board said that despite rising interest rates, interest rates remain below the floor rates. Since July 1999, interest rates at the CPF have not changed for 23 years.
The average pegged rate for January to March 2023 is 0.21 per cent and that for the other accounts is 3.47 per cent, according to the CPF website.
The interest rate for the Ordinary Account is linked to the three month average fixed deposit and savings rates of three major local banks - DBS, UOB and OCBC.
The interest rate for the other accounts is pegged to the 12 month average yield of 10 year Singapore Government Securities plus 1 per cent.