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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published February 14, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Tweaks to CPF schemes unveiled
Rules on investment, Minimum Sum topping-up, CPF Life revised
By CHUANG PECK MING
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THE Central Provident Fund Board is tightening the CPF Investment Scheme (CPFIS) but it is also simplifying CPF Life to provide retirement income for life and further liberalising the Minimum Sum Top-Up Scheme.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>The announcements were made in Parliament yesterday by Acting Manpower Minister Gan Kim Yong during the Committee of Supply debate on the budget for the Ministry of Manpower.
On the CPFIS, Mr Gan said the more stringent admission criteria introduced in 2006 for new funds would apply to all existing funds under the scheme from Jan 1, 2011 for new investments.
'This is to lower the cost and improve the quality of the funds in CPFIS,' Mr Gan said.
<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD><TABLE cellSpacing=0 cellPadding=4 width=200 align=left border=0><TBODY><TR bgColor=#4e6e78><TD colSpan=2 height=8>[FONT=Verdana, Arial, Helvetica, sans-serif]Related article: </TD></TR><TR bgColor=#d5e9f1><TD>
</TD><TD>[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=-2]Click here for Mr Gan's speech[/SIZE][/FONT]</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>The more stringent criteria take into account a fund's relative rating, track record and expense ratio.
Also, since April 1 last year, with the introduction of the extra one per cent CPF interest rate, only monies in excess of $20,000 in the Ordinary Account (OA) and $20,000 in the Special Account (SA) can be invested under CPFIS.
From May 1, 2009, the threshold of SA would be raised from $20,000 to $30,000.
'Given the higher interest rate on the SA and the uncertainty of CPFIS returns, it is better to be more conservative,' Mr Gan said.
This means that CPF members can only invest amounts in the SA in excess of $30,000. Existing investments would not be affected and the restriction on the first $20,000 in the OA stays unchanged.
For CPF Life, introduced last year to provide CPF members income for life, Mr Gan said the original 12 different plans - six refundable and six non-refundable - have been reduced to four which are 'meaningful, simple and clear'.
'The original 12 plans gave members a choice, but at the same time made it more difficult for members to decide on an appropriate plan,' he said.
Mr Gan said the four plans offer CPF members a range of trade-offs between two key considerations - the level of monthly income and the bequest amount for beneficiaries.
The default plan, called the LIFE Balanced Plan, provides CPF members with a balance between a reasonable level of retirement income and some bequest amount if they die early.
Those who prefer a higher monthly income can opt for the LIFE Plus Plan, but the trade-off is a lower bequest amount. Others who wish to leave more for their beneficiaries can choose the LIFE Basic Plan, but they must accept a lower monthly income.
And if anyone who does not want to leave behind any money, he can go for the LIFE Income Plan which offers the highest monthly income.
The payouts for all four plans start at age 65.
Mr Gan also said the CPF Minimum Sum Topping-Up Scheme would be further liberalised.
'Previously, we only allowed those with at least 11/2 times the prevailing Minimum Sum in their CPF balances to make top-ups using their CPF savings,' he said. 'From April 1, 2009, they need only have CPF balances of at least the prevailing Minimum Sum to be allowed to make CPF top-ups.'
From Aug 1 this year, the 55-or-above age restriction for top-ups for parents and grandparents will also be removed. [/FONT]
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Tweaks to CPF schemes unveiled
Rules on investment, Minimum Sum topping-up, CPF Life revised
By CHUANG PECK MING
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20></TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20></TD><TD>Feedback</TD></TR></TBODY></TABLE>THE Central Provident Fund Board is tightening the CPF Investment Scheme (CPFIS) but it is also simplifying CPF Life to provide retirement income for life and further liberalising the Minimum Sum Top-Up Scheme.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>The announcements were made in Parliament yesterday by Acting Manpower Minister Gan Kim Yong during the Committee of Supply debate on the budget for the Ministry of Manpower.On the CPFIS, Mr Gan said the more stringent admission criteria introduced in 2006 for new funds would apply to all existing funds under the scheme from Jan 1, 2011 for new investments.
'This is to lower the cost and improve the quality of the funds in CPFIS,' Mr Gan said.
<TABLE cellSpacing=0 cellPadding=5 width=120 align=left border=0><TBODY><TR><TD><TABLE cellSpacing=0 cellPadding=4 width=200 align=left border=0><TBODY><TR bgColor=#4e6e78><TD colSpan=2 height=8>[FONT=Verdana, Arial, Helvetica, sans-serif]Related article: </TD></TR><TR bgColor=#d5e9f1><TD>
Also, since April 1 last year, with the introduction of the extra one per cent CPF interest rate, only monies in excess of $20,000 in the Ordinary Account (OA) and $20,000 in the Special Account (SA) can be invested under CPFIS.
From May 1, 2009, the threshold of SA would be raised from $20,000 to $30,000.
'Given the higher interest rate on the SA and the uncertainty of CPFIS returns, it is better to be more conservative,' Mr Gan said.
This means that CPF members can only invest amounts in the SA in excess of $30,000. Existing investments would not be affected and the restriction on the first $20,000 in the OA stays unchanged.
For CPF Life, introduced last year to provide CPF members income for life, Mr Gan said the original 12 different plans - six refundable and six non-refundable - have been reduced to four which are 'meaningful, simple and clear'.
'The original 12 plans gave members a choice, but at the same time made it more difficult for members to decide on an appropriate plan,' he said.
Mr Gan said the four plans offer CPF members a range of trade-offs between two key considerations - the level of monthly income and the bequest amount for beneficiaries.
The default plan, called the LIFE Balanced Plan, provides CPF members with a balance between a reasonable level of retirement income and some bequest amount if they die early.
Those who prefer a higher monthly income can opt for the LIFE Plus Plan, but the trade-off is a lower bequest amount. Others who wish to leave more for their beneficiaries can choose the LIFE Basic Plan, but they must accept a lower monthly income.
And if anyone who does not want to leave behind any money, he can go for the LIFE Income Plan which offers the highest monthly income.
The payouts for all four plans start at age 65.
Mr Gan also said the CPF Minimum Sum Topping-Up Scheme would be further liberalised.
'Previously, we only allowed those with at least 11/2 times the prevailing Minimum Sum in their CPF balances to make top-ups using their CPF savings,' he said. 'From April 1, 2009, they need only have CPF balances of at least the prevailing Minimum Sum to be allowed to make CPF top-ups.'
From Aug 1 this year, the 55-or-above age restriction for top-ups for parents and grandparents will also be removed. [/FONT]
</TD></TR></TBODY></TABLE>
