During a parliamentary session on July 4, 2023, Minister for Manpower Tan See Leng addressed concerns regarding the Central Provident Fund (CPF) Ordinary Account (OA) interest rate, which is currently set at 2.5%. He stated that the government is closely monitoring CPF interest rate pegs to ensure they remain relevant in the current high-interest environment.

Responding to questions from Member of Parliament Saktiandi Supaat, Dr. Tan acknowledged that the OA rate has remained relatively stable despite the elevated interest rates prevalent in the market. He assured that the government would continue to periodically review CPF interest rates, taking into account both the immediate situation and the long-term outlook.

Saktiandi raised inquiries regarding the rationale behind pegging the CPF OA minimum interest rate to the average savings and deposit rates of three local banks over a three-month period, questioning if this rationale still holds in light of current market conditions and the variety of interest products available.

Dr. Tan clarified that CPF rates are linked to the returns on investments with comparable risk and duration. He emphasized that the OA peg is designed for liquidity, allowing savings to be withdrawn for purposes such as home purchases, mortgage servicing, or specified investments. He further noted that other interest-bearing products, particularly those with conditional rates, cannot be directly compared to the OA due to their dependency on meeting specific criteria like credit card usage or salary deposits.

In addition, Saktiandi asked whether the Housing and Development Board (HDB) concessionary loan rate could be separated from the CPF OA rate. While Dr. Tan did not directly answer this question, he indicated that any changes to the OA interest rate would require careful consideration due to potential implications for HDB borrowers, as the HDB concessionary loan rate is currently linked to the CPF OA interest rate.