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SINGAPORE: Manpower Minister Tan See Leng asserted on Wednesday (Feb 7) that there can be no modifications to the present computation methodology for Central Provident Fund (CPF) month-to-month curiosity funds after a Employees’ Get together member raised issues about potential curiosity loss for CPF members partaking in fund transactions for investments.
Whereas acknowledging that the changes might lead to barely larger curiosity funds for these making CPF transactions, the minister mentioned that every one members already profit from the prevailing system’s larger rates of interest.
Presently, CPF contributions made in a month solely start incomes curiosity the next month, whereas withdrawals and deductions made in a month don’t accrue curiosity from that very same month.
Sengkang GRC MP Louis Chua had proposed reconsidering the inclusion of CPF contributions made through the month within the month-to-month curiosity fee computation and pro-rating the curiosity fee primarily based on the variety of days an quantity is held earlier than withdrawal.
In response, Minister Tan emphasised that the present computation methodology needs to be thought-about within the context of the distinctive options of the CPF system that differ from financial institution deposits.
He highlighted the federal government’s dedication to sustaining the Peculiar Account (OA)’s 2.5% minimal curiosity and the 4% flooring charge for the Particular, Medisave, and Retirement Accounts (SMRA) regardless of a protracted low-interest charge surroundings.
The minister additionally identified further advantages for CPF members, together with 1% further curiosity on the primary S$60,000 of mixed CPF balances and a further 1% for members aged 55 and above on the primary S$30,000 of mixed CPF balances.
Addressing issues about potential curiosity loss for these investing in financial institution deposits, Mr Tan famous that untimely withdrawal from fastened deposits might result in forfeiting potential curiosity earned.
He added that the SMRA curiosity would have dropped to a mean of three.2 per cent if it was aligned with native banks with out the 4 per cent flooring charge on SMRA financial savings.
Stressing the sustainability of the present computation methodology over the long run in comparison with investing in shorter-term, extra unstable devices, Mr Tan mentioned:
“Whereas altering the computation methodology can translate into some marginally larger CPF curiosity funds, the options that I’ve simply laid out already present our CPF members with a lot larger curiosity and a better increase to their CPF financial savings.”
Mr Tan assured that the CPF Board repeatedly opinions curiosity computation to optimize returns for members and handle geopolitical uncertainties.
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