“””WP MP Louis Chua Calls for Review of CPF Ordinary Account Formula”” “

SINGAPORE: Workers’ Party MP Louis Chua (Sengkang GRC) emphasized the need to revisit the formula governing the interest rates for the CPF Ordinary Account (OA) in a Facebook post on May 30 (Tuesday). He noted that following an announcement from the CPF Board on May 29, the interest rates for Special and Medisave accounts will increase from 4.00 percent to 4.01 percent, while the OA interest rate remains unchanged.

Chua highlighted that the OA formula has not been updated since 1999, stating, “It is time that we relook reviewing this formula to better reflect the current nature of fixed deposit and savings rates from the three local banks, even if the CPF’s preference is not to factor in inflation in the formula.”

While acknowledging that the increase in Special and Medisave accounts is minimal, he pointed out that these accounts are at least tied to 10-Year Singapore Government bond yields, providing a safety net for long-term retirement savings.

Chua expressed concern over the stagnation of the OA interest rate, which is still pegged at a low 0.66 percent, despite local banks offering significantly higher rates on fixed deposits and savings accounts, such as the UOB One, OCBC 360, and DBS Multiplier accounts.

He further noted that with inflation reaching 5.7 percent last month, and core inflation at 5 percent, it is imperative to adjust the OA interest rates to ensure that Singaporeans’ retirement savings can keep pace with inflation and market interest rates.

“To ensure Singaporeans’ retirement savings can keep up with inflation, or at least reflect market interest rates, I do hope the Government can review the CPF OA formula in a timely manner,” he concluded, underlining the urgency of the issue.