What is the extra 1% interest on the first S$60,000 in CPF and how does it work?

Extra Interest on First S$60,000 in CPF

The extra 1% interest on the first S$60,000 in your combined CPF balances is a benefit provided by the government to help members grow their retirement savings faster. This is applied across your Ordinary Account (OA), Special Account (SA), and Medisave Account (MA).

How the Extra Interest Works

• Base Interest Rates: Your OA earns a base rate of 2.5% per annum, while your SA and MA earn a base rate of 4% per annum (Note: The SA/RA base rate is guaranteed at 4% for 2025, as per 2025 changes).
• The Extra 1%: An additional 1% interest is earned on the first S$60,000 of your combined balances. This means:
• For balances in your OA, the effective interest rate becomes 3.5% (2.5% base + 1% extra).
• For balances in your SA and MA, the effective interest rate becomes 5% (4% base + 1% extra).
• Allocation Priority: The extra 1% interest is applied first to the OA, then to the SA, and finally to the MA, until the S$60,000 limit is reached across all three accounts.

Important Considerations and Limits

• Age Limit: This extra 1% interest benefit applies to members aged 55 and above. For those below 55, the extra 1% interest is applied only to the first S$30,000.
• SA Closure Impact (Age 55+): Following the SA closure in 2025, balances are consolidated into the Retirement Account (RA) and OA. The extra 1% interest continues to apply to the first S$60,000 across the OA and RA balances.
• Exclusions: Interest earned from this extra 1% is not included when calculating the amount available for withdrawal at age 55 or 65. Furthermore, interest earned on top-ups (like the Retirement Sum Topping-Up Scheme) is not eligible for the extra 1% interest (CPF Board clarification).

This mechanism ensures that members, especially those nearing retirement, receive a higher effective return on their initial savings buffer.