Retirement Guru: Can we outperform the CPF Board’s Interest Rate?
The Fine Print
Depending on your age, the CPF Board tells us that our CPF savings will earn us “up to 6% or 5% in interest per annum”. This is indeed an amazing return that is not easily bettered, or even, matched. But if we look closer, there are several caveats:
- This high interest rate only applies to the first $60,000 of your combined CPF balances.
- For those below age 55, it is 5% on the first $60,000; for those age 55 and above, it is 6% on the first $30,000 and 5% for the next $30,000.
- For both age groups, it is capped at $20,000 for the OA.
Based on the $4,313 median gross monthly salary of fresh graduates in 2023, Singaporeans will easily hit the $60,000 limit within 3 or 4 years of starting work. This means that the majority of Singaporeans below age 55 are effectively earning a CPF interest rate of 2.5% in their OA, while those aged 55 and above are earning 4.08% in their RA. Not quite the 5% or 6% many of us believe we will earn.
[For the period 1 July 2024 to 30 September 2024, the interest rate for the OA is 2.5% and 4.08% for the Special, MediSave, and Retirement Accounts.]
