Investment Stab

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 6 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.

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6 comments:

  1. ruby21 December 2015 at 17:58

    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. cheez22 December 2015 at 00:32

      Hi Ruby,

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

      Cheez

      Delete
  2. starlight21 December 2015 at 19:25

    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. cheez22 December 2015 at 00:31

      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
  3. Emoporer4 April 2018 at 19:19

    Does this mean that the maximum bonus interest you can earn from your OA is always $200, since it's on the first $20k?

    ReplyDelete
    Replies
    1. InvestmentStab4 April 2018 at 22:16

      Hi Emoporer,

      Yes, the max is $200. But the money will be transferred into your Special Account even though it is based on your Ordinary Account's balance. The extra 1% is meant to supplement your retirement.
      Hope this clarifies! :D

      Cheers!

      Delete