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

Monday, 21 December 2015

CPF Bonus +1% Interest for Age below 55

14:01 Posted by cheez 4 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 3 different CPF accounts.
The higher the percentage your OA & SA make up of the $60,000, the higher the chances of you drawing out your CPF at old age.
If you are below age 55, the order of the extra 1% interest goes like this:
1) Ordinary Account (OA)*
2) Special Account (SA)
3) Medisave Account (MA)

*Bonus 1% interest earned on your OA goes into your SA. 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 you have less than $20,000 in your Ordinary Account,










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,











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 all 3 Eg, your SA will earn 5% interest.
Medisave Account
In Eg 4 your MA will earn 5% interest.
In Eg 5, your MA's $10,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.
In Eg6, your MA's $15,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.



Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

Have a feedback? Tell us now! 

Subscribe to us or 
Follow us: Investment Stab on Facebook
Share this :

4 comments:

  1. Medisave Account
    In Eg 4, your MA will earn 5% interest.
    In Eg5, your MA's $10,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.
    In Eg6, your MA's $15,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.

    ReplyDelete
    Replies
    1. Hi Ruby,

      Thank you for pointing out my mistake!
      I have made the changes! :D
      Thank you very much :)

      Cheez

      Delete
  2. Just too complicated to keep track on the interest rates for various a/c.
    May I conclude that the more money in each account, the better it is?

    ReplyDelete
    Replies
    1. Hi Starlight,

      Technically, you are correct to say that the more money we have in each account the better.
      But for those who are working to accumulate enough retirement income for the future, the more money you have in your OA & SA is better than having more in your MA.
      Your MA money will be used to pay for medical bills and medishield life premiums.
      However, the extra interest earned from your OA & SA will contribute to your future retirement sum, which if exceed the statutory retirement sum, can be withdrawn.
      MA will need to hit the required Medisave Sum before it can be withdraw
      So the more in your OA & SA is better than in your MA

      Thank you
      Cheez

      Delete