CPF Retirement Sum Scheme

[BBCWatcher]

the MA interest will not be credited to MA, but flow to OA. hence the gap will open up

The relevant detail for MA interest "spillover" is simply what your MA balance is when interest is credited on December 31. If your MA is at or near the BHS at that moment then some or all of the MA interest will spill over. Otherwise, MA interest will stay in MA.

If you don't have any deductions from MA or contributions to MA then your MA balance may trail behind the Basic Healthcare Sum, but only a little (a few thousand dollars) if you've previously hit the BHS. Interest will keep it "close to" the BHS. And then when you turn 65 the BHS is fixed, so (with the same assumptions) MA interest can eventually keep MA pegged at the BHS.

 

[lzydata]

the MA interest will not be credited to MA, but flow to OA. hence the gap will open up

Yes, good point, I missed that. In one year we earn the interest for the MA that is likely more than the BHS increment for the next year, but after the interest goes to OA it will earn 2.5% pa only so it won't compound as much. The only way to maintain the MA balance at the BHS is to keep contributing and/or voluntarily topping up.