Additional Interest Rates for Low-income Groups' CPF Savings

48 Mr Gan Thiam Poh asked the Minister for Manpower whether additional interest rates can be given to the low-income groups' CPF savings that will support their retirement needs.

Mrs Josephine Teo: The Central Provident Fund (CPF) system has a progressive interest rate structure that provides a higher effective interest rate to CPF members with lower balances.

Balances in the Ordinary Account earn 2.5% per annum, while those in the Special Account, Retirement Account and MediSave Account earn 4% per annum. On top of this, an extra interest of 1% is paid on the first $60,000 of combined CPF balances. CPF members aged 55 and above also receive an Additional Extra Interest of 1% on the first $30,000 of their combined CPF balances. Therefore, CPF members with lower balances are earning a higher effective interest rate per annum on their CPF savings.

The Government also provides CPF top-ups to help low-wage Singaporeans build up their retirement savings via the Workfare Income Supplement (WIS) Scheme. For example, eligible low-wage employees aged 45 to 54 receive up to $2,200 of WIS payouts a year, comprising 60% in CPF top-ups and 40% in cash. Older workers receive even higher WIS payouts. In total, more than $650 million in WIS payouts were paid to over 400,000 low-wage workers in 2017, of which more than $400 million were credited into their CPF accounts.