Update on Child Development Account Not Being Matched to CPF Ordinary Account Interest Rate

Mr Leong Mun Wai asked the Minister for Social and Family Development (a) why are the interest rates for the Child Development Account (CDA) not pegged to the CPF Ordinary Account (CPF OA) interest rate; and (b) whether the Government has considered taking measures to encourage banks to increase CDA interest rates to match the CPF OA interest rate and, if not, why.

Mr Masagos Zulkifli B M M: The Child Development Account (CDA) interest rate should not be compared against the CPF Ordinary Account interest rate. The CDA is meant to support parents in child raising and parents can use the monies to defray healthcare and educational costs. The CDA is thus similar to a spending account, and attracts commensurate interest rates. The banks have the discretion to set the interest rates for the CDA based on their commercial considerations, while parents have the option to decide which bank to open their child’s CDA with.

While we do not dictate the interest rates of the CDA, deposits in the CDA will receive a dollar-for-dollar matching from the Government, up to the Government co-matching cap.