Channel NewsAsia
Updated: 12/21/2012 20:05 | By Channel NewsAsia

CPF Medisave Required Amount to be raised to $38,500

CPF Medisave Required Amount to be raised to $38,500

CPF Medisave Required Amount to be raised to $38,500

SINGAPORE: From January next year, the Medisave Required Amount (MRA) in the Central Provident Fund (CPF) will be raised to S$38,500 from the current S$32,000.

The MRA refers to the amount that must be set aside in the Medisave Account, after the CPF Minimum Sum requirement has been met.

The CPF Board said those who have met the CPF Minimum Sum and have an MRA shortfall at the point of withdrawal have to make a top—up to the Medisave Account.

This can be done with part of the balances from the Ordinary Account and/or Special Account to meet the prevailing MRA.

CPF said the requirement for members to set aside the MRA in their Medisave Account is to enable them to have enough savings to meet their healthcare needs during old age.

Central Provident Fund members will also continue to enjoy a risk free interest rate of four percent on their Special and Medisave Accounts (SMA) for the next three months, from 1 January to 31 March 2013.

The interest rate on their Retirement Accounts (RA) for the whole of next year will also remain at four percent.

The CPF Board said this was in line with the government’s announcement in September that it would maintain the four percent per annum floor rate for interest earned on all monies in the Special and Medisave Accounts as well as savings in the Retirement Account until the end of next year.

Savings in the SMA currently earn either 4 percent or the 12—month average yield of 10—year Singapore Government Securities (10YSGS) plus 1 percent, whichever is the higher.

The interest rate on SMA savings is adjusted quarterly, based on interest rates on 10YSGS over a preceding 12—month period.

Since the average yield of the 10YSGS plus 1 percent, from 1 December 2011 to 30 November 2012, works out to be 2.49 percent, the SMA interest rate payable to CPF members from 1 January 2013 to 31 March 2013 will be maintained at the current floor of 4 percent, CPF said.

New RA savings are invested in SSGS which earn a fixed coupon equal to either the 12—month average yield of the 10YSGS plus 1 percent at the point of issuance, or 4 percent, whichever is the higher, adjusted yearly.

CPF said given the lower 10YSGS yield, new RA savings will earn a fixed coupon of 4 percent.

— CNA/al

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