CPF interest for 2016

[henrylbh]

Year end is coming soon.

How much interest would you expect to earn on your CPF accounts for year 2016? Come back here next week and compare what you actually earned.

Note CPF interest is calculated monthly on the lowest balance in each month and the interest is accumulated and credited to the respective accounts on 31 Dec or thereabout.

Interest rate is 2.5% on OA and 4% on MA and SA.

An extra 1% pa is paid on the first $60k of a member’s combined balances (with up to $20k from OA).

CPF members aged 55 and above will also earn an additional 1% extra interest on the first $30k of their combined balances (with up to $20k from the OA). This is paid over and above the current extra 1% interest that is earned on the first $60k of their combined balances. In other words, RA can earn up to 6% on first $30k and 5% on next $30k.

Additional interest on OA will go into SA/RA.

 

[homer123]

Do you have a calculator to derive the interest for RA under minimum sum scheme?

 

[SBC]

Why is CPF interest paid on a yearly basis? Most banks are paying out interest on a monthly basis.

Why is Gov so slow to adopt this change?

 

[orange_sky]

Why is CPF interest paid on a yearly basis? Most banks are paying out interest on a monthly basis.

Why is Gov so slow to adopt this change?

What's your hurry?
Not as if you can take out anyway

 

[elnewbie]

It's computed and compounded monthly but credited only once a year. So no loss to you.

Why is CPF interest paid on a yearly basis? Most banks are paying out interest on a monthly basis.

Why is Gov so slow to adopt this change?

 

[LiteHouse]

Why is CPF interest paid on a yearly basis? Most banks are paying out interest on a monthly basis.

Why is Gov so slow to adopt this change?

Don't be too quick to blame government. Could be the software constraints.

Microsoft is CPF's current vendor: http://www.channelnewsasia.com/news/singapore/more-than-90-of-cpf-e/2349496.html

 

[henrylbh]

It's computed and compounded monthly but credited only once a year. So no loss to you.

It's computed monthly but not compounded monthly.

 

[henrylbh]

Why is CPF interest paid on a yearly basis? Most banks are paying out interest on a monthly basis.

Why is Gov so slow to adopt this change?

Ha ha, bank pays interest on daily balance whereas CPF pays interest based on the lowest balance in each month and the interest earned each month is aggregated and credited at end of the year.

 

[SBC]

Oic. That's good to know.

 

[BBCWatcher]

It's computed and compounded monthly but credited only once a year. So no loss to you.

Right. The only difference is how many "Interest" lines appear in your CPF statement. For what is supposed to be a lifetime savings vehicle, it makes logical sense to avoid adding 11 extra lines per year to your annual CPF statement. Less is more. Having 1 line instead of 12 saves a few trees, at the very least.

And no, banks don't always print out monthly interest amounts, even when they compound monthly. Most banks don't do that for fixed deposits, for example.

 

[henrylbh]

Right. The only difference is how many "Interest" lines appear in your CPF statement. For what is supposed to be a lifetime savings vehicle, it makes logical sense to avoid adding 11 extra lines per year to your annual CPF statement. Less is more. Having 1 line instead of 12 saves a few trees, at the very least.

And no, banks don't always print out monthly interest amounts, even when they compound monthly. Most banks don't do that for fixed deposits, for example.

It makes no sense for interest to appear each month as it is not compounded monthly.

POSB passbook is the best example where interest is credited annually.

 

[elnewbie]

Oops you are right on the compounding.

It's computed monthly but not compounded monthly.

 

[tmkedmw]

Actually for those >55 and with rather large sums in CPF, they can't withdraw interest, say monthly, until the annual interest is credited.

eg 500k in CPF would easily give >$1k of interest monthly.

 

[henrylbh]

Actually for those >55 and with rather large sums in CPF, they can't withdraw interest, say monthly, until the annual interest is credited.

eg 500k in CPF would easily give >$1k of interest monthly.

Not true. If you have large sum in your OA, MA and SA when you are above 55, you can withdraw the interest (plus monthly contributions) every month.

 

[tmkedmw]

Not true. If you have large sum in your OA, MA and SA when you are above 55, you can withdraw the interest (plus monthly contributions) every month.

Interesting, I was assuming that if statement does not provide a line stating monthly interest, how does one know how much to withdraw? maybe, they only calculate if u wish to withdraw the monthly interest.

Good to know for those who may rely on CPF monthly interest for passive income.

 

[henrylbh]

Interesting, I was assuming that if statement does not provide a line stating monthly interest, how does one know how much to withdraw? maybe, they only calculate if u wish to withdraw the monthly interest.

Good to know for those who may rely on CPF monthly interest for passive income.

If you know how to calculate the interest each month, you will know approximately how much to withdraw. Follow default for withdrawal of CPF.

If you don't know, go to any branch and tell them what you want and they will give you an approximate amount to withdraw so that your principal amount will not be reduced.

 

[BBCWatcher]

It makes no sense for interest to appear each month as it is not compounded monthly.

That doesn't matter. CPF could compute and print daily Interest line items on statements if it wanted, even while compounding annually. But on a lifetime account (or at least most of lifetime)? It'd be silly, and it'd just kill more trees for those who receive or print out paper statements.

On edit: Quarterly or monthly interest line items might be nice as a selectable option for those above 55 who want them. Maybe CPF could add that feature to their "to do" list, but I wouldn't make it a top priority.

 

[henrylbh]

That doesn't matter. CPF could compute and print daily Interest line items on statements if it wanted, even while compounding annually. But on a lifetime account (or at least most of lifetime)? It'd be silly, and it'd just kill more trees for those who receive or print out paper statements.

What's use for most of them except for oggling at the numbers and wondering whether they can use it like for housing etc. and why it is not part of their cpf balance until credited at end of year.

 

[tmkedmw]

What's use for most of them except for oggling at the numbers and wondering whether they can use it like for housing etc. and why it is not part of their cpf balance until credited at end of year.

To quote someone: "When I receive my CPF statement, I feel so rich"

Corollary: "When I see my CPF interest", I feel even richer"

 

[Squaredot]

Ha ha, bank pays interest on daily balance whereas CPF pays interest based on the lowest balance in each month and the interest earned each month is aggregated and credited at end of the year.

Haha CPF can improve this part