CPF changes for investor 2008

In year 2008, new changes would affect the Singapore CPF scheme. There are a few important points to remember for investor using the CPF money.

Existing rule:

Under CPF OA
100% investible in FD, Singapore Government Bond, Unit trust, ETF, Fund management account
35% investible in Stock, REIT, Corporate Bond
10% investible in Gold, Gold ETF

Under CPF SA
100% investible in FD, Singapore Government Bond, Selected Unit trust & ETF

*Note: It doesn't make sense to invest in FD, because the FD interest is lower than CPF.

From 1 Jan 2008:

• SA interest would be pegged to 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1%
• Additional 1% interest paid on first 60k of combined balance, with up to 20k from OA. The interest would go into SA
• Unit trust which under CPFIS scheme, expense ratio cap
• Higher risk – 1.95
• Medium to High – 1.75
• Low to Medium – 1.15
• Lower risk - 0.65

From 1 Apr 2008:

• First 20k in OA and first 20k in SA cannot be used for investment
• CPFIS agent bank fee can still be drawn from account even though OA balance is below 20k
• Existing OA and SA investment holding is not affected

For detailed information, please refer to CPF FAQ.

>> There is nothing much we could do with the new rule, except to live with it. I believe if invest prudently, the unit trust portfolio should be able to deliver return more than 10% a year. The extra locked in amount actually do no good to the savvy investor.