Your Complete Guide to CPF Interest Rates
CPF interest rates apply to every employed Singaporean or PR citizen, whether they are salaried or self-employed.
It’s important to know how your CPF interest rates are calculated because after over 30 - 40 years of contributing, your CPF balance would compound into quite a tidy nest egg.
Additionally, knowing how your CPF interest rates work helps you to maximise your benefits and make informed financial decisions. To help you understand how CPF interest rates work, we’ll have a few scenarios with sample calculations.
How do CPF interest rates work?
Every Singaporean has or will have 4 CPF accounts: Ordinary Account (OA), Special Account (SA), MediSave Account (MA), Retirement Account (opened when contributor reaches 55 years old, RA).
Each month, your CPF contribution is allocated according to different allocation rates to the various CPF accounts, depending on your age:
| Table 1: Allocation rates (% of wage) | |||
| Age | Ordinary Account | Special Account | MediSave Account |
| 35 and below | 23 | 6 | 8 |
| Above 35 to 45 | 21 | 7 | 9 |
| Above 45 to 50 | 19 | 8 | 10 |
| Above 50 to 55 | 15 | 11.5 | 10.5 |
| Above 55 to 60 | 12 | 3.5 | 10.5 |
| Above 60 to 65 | 3.5 | 2.5 | 10.5 |
| Above 65 | 1 | 1 | 10.5 |
Your CPF accounts also have varying interest rates per annum which are not fixed but have minimums which you can find here.
Here’s how your CPF accounts’ interest rates are calculated:
| CPF Account Type | Floor interest rate formula |
| Ordinary Account | 3-month average of major local banks’ interest rates, subject to the legislated minimum interest of 2.5% per annum. This is reviewed quarterly. |
| Special Account | 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, subject to the current floor interest rate of 4% per annum. This is reviewed quarterly. |
| MediSave Account | |
| Retirement Account | Savings in the Retirement Account earn the weighted average interest rate of the entire invested portfolio. New savings credited to RA each year earn the 12-month average yield of 10YSGS plus 1% computed for the year, subject to the current floor interest rate of 4% per annum. This is reviewed annually. |
Extra Interest
To help enhance the retirement savings of Singaporeans, the Government pays extra interest on the first $60,000 of your combined balances (capped at $20,000 for Ordinary Account (OA)), in addition to the interest rates above.
| Age | Extra interest (capped at $20,000 for OA) |
| Below 55 years old | 1% per annum on the first $60,000 |
| 55 years old and above |
2% per annum on the first $30,000, 1% per annum on the next $30,000 This means that you earn up to 6% on your retirement savings. |
The first $60,000 of your combined balances is taken from the various accounts in the following sequence:
- 1st: Retirement Account (RA), including any CPF LIFE premium balance
- 2nd: OA, with a cap of $20,000
- 3rd: Special Account (SA)
- 4th: MediSave Account (MA)
If you’re below 55 years old, there’s an extra interest of 1.0% per annum on the first $60,000 of the combined CPF balances (capped at $20,000 from OA). The extra interest earned on your SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your SA to enhance your retirement savings.
For example, if you have the following balances:
- $40,000 in your OA;
- $10,000 in your SA; and
- $10,000 in your MA;
you won’t enjoy the extra interest rate of 1.0% on the full $60,000 combined balance. Because of the $20,000 cap on your OA, in this scenario, you’ll only receive the extra interest on $40,000 ($20,000 from OA + $10,000 from SA + $10,000 from MA).
Here’s a table to help show you this breakdown:
| CPF Account Type | CPF Balance | Extra Interest Rate (refer to Table 4) |
| Ordinary Account | $40,000 | 1.0% on $20,000 (paid into SA) |
| Special Account | $10,000 | 1.0% on $10,000 |
| MediSave Account | $10,000 | 1.0% on $10,000 |
| Total | $60,000 | 1.0% on $40,000 |
For those who are above 55 years old, contributors would gain extra interest of 2.0% on the first $30,000 and 1.0% on the next $30,000 (capped at $20,000 for OA). The extra interest earned on your RA, SA and MA balances will go to the respective accounts, while the extra interest earned on your OA balances will go into your RA to enhance your retirement savings.
For example, say you had
- $10,000 in your RA;
- $54,000 in your OA;
- $10,000 in your SA;
- $10,000 in your MA.
You’ll receive extra interest of 2.0% on $10,000 in your RA, $20,000 in your OA. Thus, you’ll receive extra interest of 2.0% on $30,000.
On top of that, there’s the 1.0% additional extra interest enjoyed by those 55 and above on your next $30,000. So, you’ll receive 1.0% additional extra interest on $10,000 in your SA and $10,000 in your MA. In total, you’ll receive additional extra interest of 1.0% on $20,000 even though you have more than $30,000 in combined CPF savings as there’s the $20,000 cap for OA.
Here’s a table to illustrate the situation for those aged 55 years and above:
| CPF Account | CPF Balance | Extra Interest Rate | Additional Extra Interest Rate |
| Retirement Account | $10,000 | 2.0% on $10,000 | |
| Ordinary Account | $54,000 | 2.0% on $20,000 (paid into RA) | |
| Special Account | $10,000 | - | 1.0% on $10,000 (paid into RA) |
| MediSave Account | $10,000 | - | 1.0% on $10,000 |
| Total | $84,000 | 2.0% on $30,000 | 1.0% on $20,000 |
Scenarios
We’ve touched on CPF’s interest, extra interest and additional extra interest (for those above 55 years old).
To illustrate these interest rates better, here are a few scenarios:
Example 1: 22-year old fresh graduate
As an employee under 35 years old, their CPF allocation would be as such:
23% to OA, 6% to SA, 8% to MA
Contribution to date: $5,000
| CPF Account | CPF Balance | Interest earned (per annum) | Extra interest earned | ||
| Ordinary Account | $3110 | 2.5% | $77.75 | 1.0% | $31.10 |
| Special Account | $810 | 4% | $32.40 | 1.0% | $8.10 |
| MediSave Account | $1080 | 4% | $43.20 | 1.0% | $10.80 |
| $5,000 | Sub-Total | $153.35 | $40 | ||
| Total interest earned | $193.35 | ||||
Example 2: 36-year old working adult
From 35-45 years old, their CPF allocation is as such:
21% to OA, 7% to SA, 9% to MA
Contribution to date: $100,000
| CPF Account | CPF Balance | Interest earned (per annum) | Extra interest earned (first $60,000 of combined balance) | ||
| Ordinary Account | $56,000 | 2.5% | $1,400 | 1.0% of S$20,000 | $200 |
| Special Account | $19,000 | 2.5% | $760 | 1.0% of S$19,000 | $190 |
| MediSave Account | $25,000 | 4% | $1,000 | 1.0% of S$21,000 | $210 |
| $100,000 | Sub-total | $3,160 | $600 | ||
| Total interest earned | $3,760 | ||||
Example 3: 66-year-old retiree
Above 65 years old, their CPF allocation is as such:
1% to OA, 1% to SA, 10.5% to MA
Contribution to date: $200,000
The reason why more money is taken from RA is because of the sequence to make up the combine balance of $60,000:
- 1st: Retirement Account (RA), including any CPF LIFE premium balance
- 2nd: OA, with a cap of $20,000
- 3rd: Special Account (SA)
- 4th: MediSave Account (MA)
| CPF Account | CPF Balance | Interest earned (per annum) | Extra interest earned (on first $30,000) | Additional extra interest (on next $30,000) | |||
| Retirement Account | $25,000 | 4% | $1,000 | 2.0% of $25,000 | $500 | 1.0% | - |
| Ordinary Account | $125,000 | 2.5% | $3,125 | 2.0% of $5,000 | $100 | 1.0% of $15,000 | $150 |
| Special Account | $25,000 | 4% | $1,000 | 2.0% | - | 1.0% of $15,000 | $150 |
| MediSave Account | $25,000 | 4% | $1,000 | 2.0% | - | 1.0% | - |
| $200,000 | Sub-total | $6,125 | $600 | $300 | |||
| Total | $7,025 | ||||||
Conclusion
CPF interest rates may be a little confusing especially since it’s adjusted quarterly, has varying interest rate depending on type of CPF account and more. With our guide, we hope you’ll then be able to review the progress of your retirement plan and top up where needed to maximise the interest rates.
Make sure to review your finances regularly in order to ensure you’re on the right track to retirement. Consult with our friendly advisors if you have any questions on your finances and get cracking on maximising your nest egg!
This article is meant purely for informational purposes and does not constitute an offer, recommendation, solicitation or advise to buy or sell any product(s). It should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. Please seek independent financial advice before making any decision.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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