Sunday, December 30, 2007

CPF Changes from 1st Jan 2008

This is an update of the first phase of changes for the CPF for the year 2008:

CPF Interest Rates
The interest rate for CPF-OA will be 2.5% + 1% for the first $20,000 and 4% + 1% for CPF-SA and CPF-MA for the balance $40,000. Note that the extra 1% interest will be credited to the Special/Retirement account, and not the respective accounts.

The Special/Medisave/Retirement account (SMRA) interest rate will no longer be pegged to 4%. Instead, it will be pegged to the 10 year Singapore Government Security 12 month yield + 1%. The government will maintain a floor of 4% for 2008 and 2009. Note that without the floor rate guaranteed by the government, the interest rate for the SMRA would be 3.9% (2.9% + 1%).

Medisave Minimum Amount
Minimum amount in CPF-MA will be raised from $11,500 to $14,000.

Housing Withdrawal Limit
CPF Withdrawal Limit for purchase of private/HDB properties will be lowered from 126% to 120% of the valuation limit.

CPF Investment Scheme Ceiling Expense Ratio

Expense Ratios Criterion By Risk Categories (Based on median expense ratios of funds included under CPFIS as at 31 December 2004

Risk Categories

Expense Ratios Criterion (%)
[Rounded off to the nearest 0.05]

Higher risk


Medium to High Risk


Low to Medium Risk


Lower Risk


Note that the sales charge ceiling of 3% was kicked in on 1st July 2007. If anyone realised why some of the funds have reduced their expense ratio, look no further for the reason.

This post I've written some time back is the summary of the changes to CPF. There would be a second phase of CPF changes on April 2008, which will include the CPF-IS changes, and the annuity. However, there seems to be a lack of news on the annuity portion. Will keep a ear out for it.

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