Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Friday, 25 December 2015

CPF Bonus +1% Interest for Age 55 & Above

17:20 Posted by cheez 2 comments
Distribution of the CPF Extra +1% of Interest between your CPF Accounts

There is a sequence in how the bonus CPF +1% interest is distributed into your CPF account.
The sequence would determine how much money goes into your 4 different CPF accounts.

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If you are age 55 and above, the order of the extra 1% interest goes like this:
1) Retirement Account (RA)
2) Ordinary Account* (OA)*
3) Special Account (SA)
4) Medisave Account (MA)

*Bonus 1% interest earned on your OA goes into your RA. The rest of the interest earned goes to the respective account (Eg; interest from MA amount goes into your MA)

Up to $20,000 comes from your Ordinary Account, the rest from Special & Medisave Accounts.
If your RA has $60,000 or more, the $60,000 will earn the full 1% bonus interest. No bonus interest will be given to the other accounts.

If you have less than $20,000 in your OA,











Retirement Account
In all 3 Eg, your RA will earn 5% interest.
Ordinary Account
In all 3 Eg, your OA will earn 3.5% interest.
Special Account
In all 3 Eg, your SA will earn 5% interest.
Medisave Account
In Eg 1&2, your MA will earn 5% interest.
However, your MA in Eg3 will earn less than 5% interest.
The first $20,000 in your MA will earn 5% interest.
The remaining $10,000 in your MA will earn 4% interest.


If you have $20,000 or more in your Ordinary Account,












Retirement Account
In all 3 Eg, the RA will earn 5% interest.
Ordinary Account
In Eg 4&6, your OA will earn 3.5% interest.
In Eg 5, the first $20,000 in your OA will earn 3.5%, the remaining $10,000 will earn 2.5%.
Special Account
In Eg 4, your SA will earn 5% interest
In Eg 5, your SA's $10,000 will earn 5% interest while the other $10,000 will earn 4% interest.
In Eg 6, your SA's $20,000 will earn 5% interest while the other $5,000 will earn 4% interest.
Medisave Account
In Eg 4, your MA will earn 5% interest
In Eg 5&6, your MA will earn 4% interest (no bonus interest at all)



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2 comments:

  1. Hi, I am not sure if u got your facts right.

    Members aged 55 and above get extra 1% on first 30k with up to 20k from oa. Hence cpf members aged 55 and above will earn up to 6% and 4.5% on retirement balances. Why did u put 5% and 3.5% in all your 6 examples? That is confusing.

    Also you should indicate in example by breaking down into tiers. That means in example 1, ra gets 6%, oa gets 4.5%, sa and ma gets 5% because first 30k is already hit
    example 3, ra gets 6%, oa gets 4.5%, sa gets 5% Coz first 30k is already hit. Then ma gets 4% Coz first 60k is already hit.
    Sorry but I think people will get confused by your article because it does not align with cpf website

    ReplyDelete
    Replies
    1. Hi Cheryl,

      Thank you for your question.
      And you are correct, there will be an extra 1% on first 30k, but that is in 2016.
      Our current article, focuses on "the distribution of 1% on $60,000".
      We are working on another article to show the distribution of interest rates for the $30,000.
      We think it would be better to split the 2 instead of lumping them together.
      But I do understand your concern that it might be confusing if there is both 30k & 60k.
      We might do an article which lumps both of them together! :)

      Thank you again for your feedback on how we could structure our post.
      I think you provided with us an even better way to structure it.
      We didn't think of how to structure it well.
      We will improve on the way of presenting the information.
      Thank you

      Cheers!
      Cheez

      Delete