Frequently Asked Questions on CPF Reforms affecting CPF Investment Schemes

1. What are the new restrictions on the CPF Investment Schemes (CPFIS) arising from the CPF Reforms?

From 1 July 2010, CPF members will not be able to invest the first $20,000 in their Ordinary Account (OA) and first $40,000 in your Special Account (SA). To invest under CPFIS-OA, members will have to set aside $20,000 in their Ordinary Account before the remaining savings in their OA can be used for investments. Similiarly, to invest under CPFIS-SA, they will have to set aside $40,000 in their SA before the remaining savings in their Special Account can be used for investments. This restriction is in place because of the extra 1% interest that members will earn on the first $60,000 of their combined CPF account from 1 January 2008.

2. Some CPF members have made investments using their CPF before 1 July 2010 and their balances in their OA is below the $20,000 and SA is below $40,000. Do they need to liquidate their CPFIS investments?

No, CPF members are not required to liquidate their CPFIS investments if they had purchased them before 1 July 2010.

3. Do CPF members need to pay cash for agent bank fees if their balances fall short of $20,000?

No, CPF members can continue to service the agent bank fees with their CPF savings even if their OA balance falls below $20,000. The agent bank fees are ongoing fees which need to be paid as long as members continue to hold on to their investment, hence CPF Board has made an exception for members to continue paying the agent bank charges using their CPF. Also, the $20,000 restriction in the OA and $40,000 in the SA is to allow members to earn additional 1% interest and they should continue to enjoy the convenience of paying the banks charges using their CPF.

4. If a CPF member sells his investments or switch between investments after 1 July 2010, will he be able to re-invest the sale proceeds if his OA is below $20,000 or SA balance is below $40,000?

Switching between investments is made up of a "sell" transaction of existing investment, followed by a "buy" transaction of new investment. Any "buy" transaction will be subjected to the $20,000 restriction (OA) and $40,000 (SA) which is applied to the balances held with the Board.

Under CPFIS-OA, when a member sells of switches his investments the sale proceeds will be credited into his CPF Investment Account. He may re-invest the sale proceeds in this Investment account, even if his OA balance is below $20,000. However, when the sale proceeds are refunded to his OA, he may not re-invest the balance if his OA balance is below $20,000.

Under CPFIS-SA, when a member sells or switches his investments, the sale proceeds may be credited to his SA and he may not re-invest the balance if his SA balance is below $40,000.

5. If a CPF member has $X in his OA and $Y in his CPF Investment Account, how much can be invested?

a) If $X is less than or equal to $20,000, member can only invest $Y.

b) If $X is more than $20,000, he can invest $X minus $20,000 and $Y.

c) If member initiates a refund of $Y to his OA or $Y is automatically refunded to his OA as he has no active transactions in his Investment Account for 2 consecutive months,

i) If $X plus $Y is less than or equal to $20,000, he will not be able to invest any amount and

ii) If $X plus $Y is more than $20,000, he is able to invest $X plus $Y minus $20,000.

6. Where can I find more information on the CPF changes and reforms?

You can find more information on the CPF website or refer to their announcement at http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/CPFChanges_2010.htm.