Understanding CPF Interest Rates: CPF OA, SA, MA, and RA Rates 2025

As of the first quarter of 2025, the Central Provident Fund (CPF) in Singapore continues to serve as a cornerstone of the nation's social security system, offering citizens and Permanent Residents a robust savings framework for retirement, healthcare, and housing needs. Understanding the current CPF interest rates is crucial for effective financial planning.

Ordinary Account (OA): The OA interest rate remains steady at 2.5% per annum (p.a.) from 1 January to 31 March 2025. This rate is pegged to the three-month average interest rates of major local banks, with a guaranteed minimum of 2.5% p.a.

Special, MediSave, and Retirement Accounts (SMRA): Savings in these accounts will earn an interest rate of 4% p.a. for the same period. This rate is determined by the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, subject to a minimum of 4% p.a. The government has extended this 4% floor rate until 31 December 2025 to support CPF members in growing their savings.

Understanding the different CPF accounts 

As you start working and make contributions to the Central Provident Fund (CPF), your savings are meticulously allocated into three specialised accounts: Ordinary Account (OA), MediSave Account (MA), and Special Account (SA). 

Additionally, upon reaching the age of 55, a fourth account — Retirement Account (RA) is established to further bolster your financial security in your golden years. Each of these accounts serves a distinct purpose, from financing your dream home to ensuring you have adequate healthcare coverage and a stable retirement income. Here's a succinct overview of what each account offers:

• Ordinary Account (OA): A versatile account that supports retirement, housing, insurance, and investment needs. It's your go-to for home loans, education financing, and investment opportunities.
• Special Account (SA): Focused on long-term savings for retirement, the SA offers higher interest rates to grow your retirement fund. Investments are primarily in retirement-related financial products.
• MediSave Account (MA): Dedicated to healthcare expenses, the MA covers hospitalization, approved medical insurance, and other approved medical expenses, ensuring you and your family's health are well taken care of.
• Retirement Account (RA): Created when you turn 55, the RA is designed to provide you with monthly retirement payouts, transforming your CPF savings into a steady income stream during retirement.

CPF interest rates 2025

Changes in SMRA Rates: The interest rate for the Special, MediSave, and Retirement Accounts (SMRA) will decrease to 4% per annum from 1 January to 31 March 2025, down from the previous quarter's rate of 4.14% p.a. This adjustment is due to a decline in the 12-month average yield of the 10-year Singapore Government Securities (10YSGS), to which the SMRA rates are pegged.

Ordinary Account (OA) Remains Unchanged: The Ordinary Account interest rate remains stable at 2.5% per annum for the same period. This consistency reflects the government's commitment to providing a predictable savings environment, essential for members planning their finances, especially concerning housing and education needs.

Understanding the calculation of CPF interest rates

CPF employs a thoughtful approach to calculating interest rates to ensure members' savings grow steadily over time. This system is designed to be both fair and adaptable, reflecting current economic conditions while providing a stable and competitive return on savings.

CPF interest rates are calculated based on the higher of two figures: the legislated floor rate or a pegged rate linked to market instruments. This design ensures that regardless of market volatility, CPF members receive a minimum guaranteed interest rate, while also allowing for the possibility of higher returns based on economic performance.

• Floor Rate: The floor rate is a safety net, guaranteeing a minimum interest rate regardless of external market conditions. It provides stability and predictability for CPF members' savings growth.
• Pegged Rate: The pegged rate is linked to specific financial instruments or market indices, making CPF returns responsive to economic conditions. This means if the market performs well, CPF members can benefit from higher interest rates, up to a certain cap.

Ordinary Account (OA) Interest Calculation

The OA interest rate is determined by the higher of two figures: the legislated minimum floor rate of 2.5% per annum (p.a.) or the three-month average interest rate of major local banks. For the period from August 2024 to October 2024, this average was 0.45%. Since the floor rate exceeds the bank average, the OA interest rate remains at 2.5% p.a.

Special, Medisave, and Retirement Accounts (SMRA) Calculation

The SMRA interest rate is pegged to the 12-month average yield of the 10-year Singapore Government Securities (10YSGS) plus 1%. For the period from November 2023 to October 2024, this calculated rate was 3.99%. However, the government has extended the floor rate of 4% p.a. for SMRA until 31 December 2025. Therefore, the SMRA interest rate is maintained at 4% p.a.

Quarterly Reviews and Adjustments

The CPF Board conducts quarterly reviews of interest rates to ensure they align with current market conditions and remain competitive. This consistent reevaluation is crucial for adapting to economic fluctuations, safeguarding the value of CPF members' savings against inflation, and maximizing growth potential. 

Through these reviews, CPF can adjust interest rates to reflect economic realities, balancing the need for stability with the opportunity for increased returns. This process ensures that members' savings continue to grow effectively, securing financial well-being for their retirement years.

CPF Ordinary Account (OA) interest rate: 2.5% (Q1 2025)

From 1 January to 31 March 2025, the OA interest rate remains at 2.5% per annum (p.a.), as the legislated floor rate continues to exceed the three-month average interest rates of major local banks.

CPF Special Account (SA), MediSave Account (MA), and Retirement Account (RA) Interest Rate: 4% (Q1 2025)

The interest rate for the SA, MA, and RA remains at 4% p.a. for Q1 2025, supported by the government's floor rate extension until 31 December 2025, despite a slight dip in the 10-year Singapore Government Securities (10YSGS) benchmark

Notably, this adjustment period marks a rare occurrence since 1999, with the interest rates for both SA and MA surpassing the 4.0% mark. 

Maximise CPF earnings: Additional CPF interest rates and extra contributions

Starting from 1st January 2024, there will be an increase in the CPF contribution rates for senior workers between the ages of 55 and 70. This change is part of Phase 3 of the increase plan, aiming to improve retirement adequacy for senior workers. The adjustments are in line with Singapore's long-term objective and will only affect Singaporean Citizens and Permanent Residents (PR) who have held permanent residency for 3 years or more. First and second-year PRs won't be affected unless they opt for the higher rates voluntarily. 

Effective 1 January 2025, the CPF monthly salary ceiling will increase from $6,800 to $7,400. This adjustment is part of a phased plan to raise the ceiling to $8,000 by 2026, allowing both employers and employees time to adapt. For employees earning $7,400 or more monthly, this change will result in higher CPF contributions, leading to a slight reduction in take-home pay but enhancing retirement savings. The CPF annual salary ceiling remains unchanged at $102,000, capping the total amount of wages—both Ordinary and Additional—that attract CPF contributions annually.

To enhance retirement savings, CPF members receive extra interest on their balances.

• Members below 55 years old: An additional 1% interest is paid on the first $60,000 of combined CPF balances, with up to $20,000 from the OA.
• Members aged 55 and above: An extra 2% interest is earned on the first $30,000, and an additional 1% on the next $30,000 of combined CPF balances. This means they can earn up to 6% interest on their retirement savings.

Additionally, starting from 1 January 2025, CPF contribution rates for employees aged above 55 to 65 have increased to strengthen their retirement adequacy. For those aged above 55 to 60, the total contribution rate is now 32.5% (up from 31%), with employer contributions at 15.5% and employee contributions at 17%. For those aged above 60 to 65, the total contribution rate is 23.5% (up from 22%), with employer contributions at 12% and employee contributions at 11.5%.

These adjustments reflect the government's commitment to enhancing retirement savings and providing a stable financial environment for CPF members.

Other ways to secure your retirement: SRS x StashAway

In Singapore, preparing for retirement involves more than just relying on the Central Provident Fund (CPF); the Supplementary Retirement Scheme (SRS) plays a vital role too. While both are integral to securing your financial future, they serve different purposes and offer distinct benefits.

CPF vs. SRS: Complementary tools for retirement

• CPF: It's mandatory for all working Singaporeans and PRs, offering a high degree of security with guaranteed returns. CPF contributions are used for retirement savings, housing, and healthcare.
• SRS: This is a voluntary scheme aimed at supplementing CPF savings. Contributions to SRS are eligible for tax deductions, reducing your taxable income. Unlike CPF, the SRS offers flexibility in the choice of investment and timing of withdrawals, which can be strategically planned for lower tax liabilities post-retirement.

Investing SRS funds with StashAway

StashAway provides an ideal platform to grow your SRS funds through smart and adaptive investments:

1. Customised Portfolio Options: Depending on your risk appetite and retirement goals, StashAway can tailor investment portfolios that range from conservative to growth-oriented, maximizing your potential returns.
2. Regulated by MAS: As a platform regulated by the Monetary Authority of Singapore, StashAway adheres to high standards of security and compliance, ensuring your investments are safe and well-managed.
3. Low Fees, High Transparency: StashAway charges lower management fees compared to traditional investment services, with no hidden costs—ensuring your savings work harder for you.
4. Tax Efficiency: Investing through SRS not only grows your wealth but also optimises tax benefits. Only 50% of withdrawals from SRS are taxable at retirement, and if planned wisely, these withdrawals can be taxed at a lower rate amidst lower income during retirement years.