In an effort to keep inflation expectations well anchored and to moderate the future path of interest rates, the Reserve Bank has announced an increase to the repurchase rate (repo rate). The repo rate will be increased by 25 basis points, from 3.5% to 3.75%, effective 19 November 2021.
The change in repo rate impacts the “official rate” used to calculate the fringe benefit on employer loans and which is set at 1% above the repo rate. The official interest rate for employer loans will therefore change from 4.5% to 4.75% effective 1 December 2021.
As always, you do not need to take any action to implement the new interest rate. We have already updated the system to reflect these changes. All employer loans on payslips dated from 1 December 2021 will make use of the new interest rate. As our system is built to be intuitive, any payslips dated before 1 December 2021 will make use of the previous interest rate.
You can find more information on employer loans on our help page here.
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