INVESTMENT OF CENTRAL PROVIDENT FUND SAVINGS AND PAYMENT OF INTEREST RATES

Mrs Lim Hwee Hua asked the Minister for Manpower how the Central Provident Fund Board invests members' savings, and whether the interest rates payable will be adjusted on a more timely basis, given the possible volatility in domestic interest rates.

Dr Lee Boon Yang: CPF members' savings with the Central Provident Fund are invested in Government Bonds, Advance Deposits with MAS and bank deposits. The CPF Board does not invest members' savings in equities or foreign currencies.

I have earlier asked the CPF Board to review the six-month time lag between interest rates of commercial banks and those paid on CPF savings to make the CPF interest rate more reflective of the prevailing market rates. As this has implications on the HDB concessionary mortgage rate which is currently pegged at 0.1 per cent above the CPF interest rate, we are still reviewing the matter with related agencies. An announcement will be made once the review is completed.