Historical CPF Interest Rates and tidbits

Since 1999 till present, OA, SA and RA interest rates have been consistent at 2.5%, 4% and 4% respectively. Since 2002 till present, MA interest rate has been consistent at 4%.

Account TypeIntroduced in
Special Account (SA) July 1977
MediSave Account (MA) April 1984
Retirement Account (RA) January 1987

PeriodCPF interest
1955 to 1976Interest was credited and compounded annually
1977 to 1985 Interest was credited quarterly and compounded annually
1986 to present Interest was computed monthly and compounded and credited annually

Extra and Additional Extra interest

From 1 Jan 2008, an extra 1% interest is paid on the first $60,000 of a member’s combined balances, of which up to $20,000 comes from OA.

From 1 Jan 2016, for CPF members aged 55 and above, an additional extra 1% interest is paid on the first $30,000 of a member’s combined balances, of which up to $20,000 comes from OA.

Determination of Interest Rates OA, SA, MA and RA

From 1 Jul 1995, the Special and Retirement Accounts earned additional interest of 1.25% points above the CPF interest rate paid for Ordinary and Medisave Accounts.

From 1 Jul 1998, the Special and Retirement Accounts earned additional interest of 1.5% points above the CPF interest rate paid for Ordinary and Medisave Accounts.

From 1 Oct 2001, the Medisave, Special and Retirement Accounts earned additional interest of 1.5% points above the CPF interest rate paid for Ordinary Account.

From 1 Jan 2008, interest on savings in the Special, Medisave and Retirement Accounts is pegged to the 12-month average yield of the 10-year Singapore Government Securities (10YSGS) plus 1%.

From 1 January 2010, RA savings are invested in SSGS which earn a fixed coupon equal to the 12-month average yield of the 10YSGS plus 1% at the first point of issuance in the year. The interest rate to be applied to the RA will be the weighted average interest of the entire portfolio of these SSGS, and adjusted yearly in January.

Interest rates Allocation Priority for your CPF RA, OA and SA

For all CPF members, extra 1% interest is earned on the first $60,000 of your combined balances across RA (if applicable), OA, SA and MA.

If you are aged 55 and above, an additional 1% extra interest is earned on the first $30,000 of your combined balances across RA, OA, SA and MA.

The order of priority for interest earned is as follows depending on whether you are Age < 55 or >= 55:

Age < 55

AccountInterest rateRemarks
Ordinary Account (OA)2.5% – 3.5%Capped at $20,000
Special Account (SA)4% – 5%
MediSave Account (MA)4% – 5%

Scenario 1 (OA + MA + SA =< $60,000. OA < $20,000)

Member has OA: $10,000 SA: $20,000 MA, MA: $30,000

AccountAmountAmount and Interest rate
OA$10,000$10,000 (3.5%)
SA$20,000 $20,000 (5%)
MA$30,000 $30,000 (5%)
Total$60,000

Scenario 2 (OA + MA + SA > $60,000. OA > $20,000)

Member has OA: $30,000 SA: $20,000 MA, MA: $50,000

AccountAmountAmount and Interest rate
OA$30,000 $20,000 (3.5%) (Capped at $20,000)
$10,000 (2.5%) (rest of OA does not earn extra 1%)
SA$20,000 $20,000 (5%) (OA + SA + MA forms first $60,000)
MA$50,000 $20,000 (5%) (OA + SA + MA forms first $60,000)
$30,000 (4%) (rest of MA does not earn extra 1%)
Total$100,000

Scenario 3

Member has OA: $30,000 SA: $50,000 MA, MA: $50,000

AccountAmountAmount and Interest rate
OA$30,000 $20,000 (3.5%) (Capped at $20,000)
$10,000 (2.5%) (rest of OA does not earn extra 1%)
SA$50,000 $40,000 (5%) (OA + SA forms first $60,000)
$10,000 (4%) (rest of SA does not earn extra 1%)
MA$50,000 $50,000 (4%) (rest of MA does not earn extra 1%)
Total$130,000

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Age >= 55

AccountInterest rateRemarks
Retirement Account (RA)4% – 6%Inclusive of CPF LIFE premium
Ordinary Account (OA)2.5% – 3.5%Capped at $20,000
Special Account (SA)4% – 5%
MediSave Account (MA)4% – 5%

Scenario 1

Member has RA: $20,000 OA: $30,000 SA: $50,000 MA, MA: $50,000

AccountAmountAmount and Interest rate
RA$20,000$20,000 (6%) (Extra 1% on first $60,0000 + additional extra 1% on first $30,000)
OA$30,000 $20,000 (3.5%) (Capped at $20,000)
$10,000 (2.5%) (rest of OA does not earn extra 1%)
SA$50,000 $20,000 (5%) (RA + OA + SA forms first $60,000)
$30,000 (4%) (rest of SA does not earn extra 1%)
MA$50,000 $50,000 (4%) (rest of MA does not earn extra 1%)
Total$150,000

Scenario 2

Member has RA: $50,000 OA: $30,000 SA: $50,000 MA, MA: $50,000

AccountAmountAmount and Interest rate
RA$50,000$30,000 (6%) (Extra 1% on first $60,0000 + additional extra 1% on first $30,000)
$20,000 (5%) (Extra 1% on first $60,0000 + additional extra 1% on first $30,00)
OA$30,000 $10,000 (3.5%) (RA + OA forms first $60,000)
$20,000 (2.5%) (rest of OA does not earn extra 1%)
SA$50,000 $50,000 (4%) (rest of SA does not earn extra 1%)
MA$50,000 $50,000 (4%) (rest of MA does not earn extra 1%)
Total$180,000

Scenario 3

Member has RA: $80,000 OA: $30,000 SA: $50,000 MA, MA: $50,000

AccountAmountAmount and Interest rate
RA$80,000 $30,000 (6%) (Extra 1% on first $60,0000 + additional extra 1% on first $30,000)
$30,000 (5%) (Extra 1% on first $60,000)
$20,000 (4%) (rest of RA does not earn extra 1%)
OA$30,000 $30,000 (2.5%) (rest of OA does not earn extra 1%)
SA$50,000 $50,000 (4%) (rest of SA does not earn extra 1%)
MA$50,000 $50,000 (4%) (rest of MA does not earn extra 1%)
Total$210,000

Avoid paying too much income taxes

Income taxes are a financial burden to working individuals. It is essential is to recognise that there is a way to lessen this burden by maximising the tax reliefs claimable for each assessment year. From Year of Assessment (YA) 2018, the total amount of personal income tax reliefs which you can be allowed is subject to an overall relief cap of $80,000.

Most people generally confuse tax relief with tax rebate. A tax relief is deduction from the total income to derive your chargeable income, whereas tax rebate is deducted from the actual taxed amount.

Chargeable IncomeGross Tax payable Chargeable IncomeIncome Tax rateGross Tax payable
First $20,000$00%$0
First $20,000$0Next $10,0002%$200
First $30,000$200Next $10,0003.5%$350
First $40,000$550Next $40,0007%$2,800
First $80,000$3,350 Next $40,000 11.5%$4,600
First $120,000$7,950 Next $40,00015%$6,000
First $160,000$13,950 Next $40,00018%$7,200
First $200,000$21,150 Next $40,00019%$7,600
First $240,000$28,750 Next $40,00019.5%$7,800
First $280,000$36,550 Next $40,00020%$8,000
First $320,000$44,550 Next $40,00022%

Why is maximising your tax reliefs significant? An individual who earns $320,000 would have to pay $44,550 in income taxes alone. If he manages to maximise the tax reliefs of $80,000, the income taxes is reduced to $28,750 (a saving of 35% in taxes). An individual who earns $120,000 reduces his taxes from $7,950 to $550 with maximum tax reliefs (a savings of 93% in taxes).

Do note that the tax rate increases the higher amount you earn. The whole objective is to move down a lower tax bracket.

The Ministry of Finance (MOF) website does a good job in elaborating the quantum and objectives of each tax relief. I reviewed the tax reliefs that I have claimed for YA 2018 and noted down how I could have done better for next year.

The total tax reliefs was $46,072 (only 58% claimed). Was it good enough? No. Could it have been better? Yes, definitely. How could I have improved it?

Tax ReliefsQuantumObjectives
Relief for cash top-up of own CPF Special / Retirement AccountMaximum S$7,000 a year To encourage Singaporeans to save for their retirement.
Relief for Supplementary Retirement Scheme (SRS) contributions Maximum S$15,300 a year To encourage Singaporeans to save for their retirement.

A top-up to both SA and SRS to the max will increase the tax reliefs to $68,372 and essentially bring me down from 7% to 3.5% bracket. This is of course the ideal scenario. However based on current cashflow, I mentioned about being comfortable to commit $100 to SA each month. $1,200 though small, is still a good start.

Looking at some of my other family members, I could tell that there are more ways to reduce their income taxes than what is currently being claimed.

For all working adults, it is good to mark out what claims are eligible to claim for each YA and work on it diligently. You should also find time to do the same for your family members for those who are less savvy on tax matters.

Simulating the compounding of SA from young

I initiated the top-up of my child’s SA in September 2019 to kick off the power of compounding interest. A monthly $100 top-up is a small but steady way in building up her assets. To reiterate, the first $60,000 of combined balances (with up to $20,000 from the OA) earns an extra 1% interest.

It will be a long way before the first combined $60,000 is reached. This also means every top-up earns 5% p.a.! It is too good a deal if parents start young enough. Do note however, it is essential to top up what you can afford as it is a one-way transfer till a good 55 years later.

How would this work out for my child if I were to do that till she reaches the adult age of 21 at the end of year 2038? In this case, MA and SA both earn 5% interest as they are well below the combined balances of $60,000.

YearMASATotal
2019$4,136$504$4,639
2020$4,342$1,756$6,099
2021$4,559$3,072$7,630
2022$4,786$4,452$9,238
2023$5,024$5,901$10,925
2024$5,274$7,423$12,697
2025$5,537$9,020$14,557
2026$5,812$10,697$16,510
2027$6,102$12,458$18,559
2028$6,406$14,306$20,711
2029$6,725$16,246$22,971
2030$7,060$18,282$25,342
2031$7,411$20,421$27,832
2032$7,780$22,665$30,446
2033$8,168$25,022$33,189
2034$8,575$27,495$36,070
2035$9,002$30,092$39,094
2036$9,450$32,819$42,269
2037$9,921$35,681$45,601
2038$10,415$38,685$49,100

With a total top-up of $23,300 over the years, she will have a combined balance of $50,000 when she starts work in society. This first $50,000 will continue working hard for her at 5% p.a.

Mortgage rate is killing me

So ever since we initially gotten a home loan in November 2017, interest rates have gradually been creeping up on us. In a blink of an eye, Maybank had raised its Fixed Deposit Mortgage Rate (FDMR) from 1.20% to 2.05%, which is about a 70% increase.

MAYBANKFDMR36
+0.08%
FDMR36
+0.18%
FDMR36
+0.28%
Revision fromFDMR361st Year2nd Year3rd Year
17 APR-192.05%2.13%2.23%2.33%
26 JUL-181.80%1.88%1.98%2.08%
20 MAR-181.40%1.48%1.58%1.68%
NOV-171.20%1.28%1.38%1.48%

This also means that what I could have enjoyed a low interest rate of 1.38% is now 2.23% in my second year. There was a need to tackle this now. So I did a comparison in the market on what is available and settled on a 3-years Fixed with UOB.

UOB1st Year2nd Year3rd Year
Sep-191.98% Fixed1.98% Fixed2.08% Fixed

The climate seems uncertain on the direction of SIBOR/SOR movement in the near future, thus far I am not taking any chances by locking into 1.98% for now. This translates to about $200+ of savings in monthly installment from what we are paying currently.

Moreover, should interest rates lower in the next year or so, the contract allows us one free conversion of interest rate. For folks who miss out on home refinancing, it is good to periodically monitor the end of your lock-in period and shop around for cheaper interest rates in the market.