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The Board is pleased to announce that from 1 July 2006 it will:
a) Distribution of HPS Surplus
The Board has built up a surplus in the HPS arising from better investment returns, less claim payout than expected and low operating expenses. The Board has decided to distribute a surplus of $480 m to HPS members in July 2006. This will be the fourth time that the Board will be distributing HPS surplus to members, having made similar distributions on three prior occasions in 1986, 1989 and 1997.
In all, about 950,000 HPS members will benefit from the distribution, which they will receive in the form of rebates credited to their CPF Ordinary Accounts. They comprise 325,000 existing Single Premium (SP) members, 285,000 past SP members who were insured under the scheme from 1997 (i.e. since the last distribution) and 340,000 existing Annual Premium (AP) members. The group of SP members will receive a larger share of the distribution as they had paid full premiums upfront. These constitute the bulk of the insurance fund and had contributed to most of the surplus.
The Board will be writing to all eligible members to inform them of the rebates in the last week of June 2006. The rebates will be credited to members’ CPF Ordinary Accounts on 1 July 2006, and will form part of their Ordinary Account savings. They can be used or withdrawn under normal CPF rules.
b) Reduction in HPS premiums
The Board will also be lowering its HPS annual premium rates from 1 July 2006 for all HPS members, with larger percentage reductions for the older age groups. Members who join the HPS scheme on or after 1 July 2006 will enjoy the new rates. Existing HPS members will pay the lower premiums when they renew their annual covers.
The Board is able to reduce the HPS premiums because of the lower mortgage interest rates in recent years, less claim payout than expected and its low operating expenses. In addition, the Board is lowering the annual premium rates further by collecting the total premiums payable over a longer premium payment term.
With the reduction in premium rates, most HPS members will have their total premiums paid over the cover period reduced by between 10% and 35%. For example, a 35-year-old member currently pays $282.60 yearly over 16 years for a 20-year loan of $200,000 from a bank. With the revisions, he will pay only $216.00 yearly over 18 years for the same 20-year loan. Thus, for the whole period of cover, this member will enjoy reductions of 23% in the annual premium and 14% in total premiums.
About HPS
HPS is a compulsory mortgage-reducing insurance for members who are using their CPF savings to service their loans for HDB flats. It provides financial protection for members and their families against losing their homes should members die or become permanently incapacitated. Members may use their CPF savings to pay the insurance premiums. They are covered for the period of the housing loan or until they reach the maximum cover age of 65, whichever is earlier.
Prior to 2001, HPS premiums were paid in full upfront. These are the Single Premium (SP) policies. The Board has stopped SP policies and introduced Annual Premium (AP) policies since 2001. There are about 325,000 SP members and 340,000 AP members. Read information in Chinese | Malay | Tamil.
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Members with enquiries can send their emails to Insurance@cpf.gov.sg. |