CPF will pay out a Special, Medisave and Retirement Accounts (SMRA) interest floor rate of 4% for the first quarter of 2009.

The SMRA interest rate is pegged to the 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1% from January 1 this year.

Presently, the average yield of the 10YSGS over one year, from December 1, 2007 to November 30, 2008, plus 1% works out to be 3.79%.

However, to help CPF members adjust to the floating SMRA rate, the Government will maintain the 4% floor rate till December 31 next year if the 10YSGS yield plus 1% is below 4%. After that, the 2.5% floor rate will apply for all CPF accounts.

Hence, the SMRA interest rate paid from January 1, 2009 to March 31, 2009 will be at the floor rate of 4%.

Additional 1% interest

An additional 1% interest will be paid on the first $60,000 of a member's combined balances, with up to $20,000 from the Ordinary Account (OA). The additional interest received on the OA will go into the member's Special or Retirement Account to enhance his retirement savings.

The CPF interest rate will continue to be reviewed quarterly. Improving returns on CPF savings is one of the key changes introduced to help Singaporeans improve their retirement adequacy.

Medisave required amount

From January 1 next  year, the Required Amount will be raised from the current $14,000 to $18,000, after adjusting for inflation. The Required Amount will increase by $2,500 (in 2003 dollars) each year until it reaches $25,000 (in 2003 dollars) on 1 January 2013.