Reminder: CPF Changes from 1 January 2008
	News Release by: Central Provident Fund Board 12 December 2007 --
	The Board would like to remind CPF members of the following changes to the CPF schemes which will take effect from 1 January 2008:- I. Interest Rates for Special, Medisave and Retirement Accounts (SMRA) II. CPF Minimum Sum Topping Up Scheme III. Medisave Required Amount IV. Housing Withdrawal Limits V. CPF Investment Scheme – Lower Expenses Ratio
	I. CPF INTEREST RATE FOR SPECIAL, MEDISAVE AND RETIREMENT ACCOUNTS (SMRA)
	From 1 January 2008, savings in the Special Account, Medisave Account and Retirement Account will be pegged to the 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1%. The average yield of the 10YSGS over one year, from 1 December 2006 to 30 November 2007, plus 1% works out to be 3.9%.
	To help CPF members adjust to the floating SMRA rate, the Government will maintain the 4% floor rate for two years if the 10YSGS yield plus 1% is below 4%. After two years, the 2.5% floor rate will apply for all CPF accounts.
	Hence, the SMRA interest rate paid from 1 January 2008 to 31 March 2008 will be 4% (floor rate).
	Additional Interest of 1% From 1 January 2008, an additional 1% interest will be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA). The additional interest received on the OA will go into the member’s Special or Retirement Account to enhance his retirement savings.
	The CPF interest rate will continue to be reviewed quarterly. Improving returns on CPF savings is one of the key changes introduced to help Singaporeans improve their retirement adequacy.
	For the computation of the CPF interest rate for SMRA and the 10-year SGS yield, please refer to Annex A.
	II. CPF MINIMUM SUM TOPPING UP SCHEME
	CPF members can top up the Special Accounts of their spouse and/or siblings who are below age 55, using cash and/or CPF. The topping up limit will be the prevailing Minimum Sum less the recipient’s net balances in his Ordinary and Special accounts (including amounts invested under the CPF Investment Scheme). Cash top-ups are also subject to the Voluntary Contribution Limit. More details on the top-ups are available on www.cpf.gov.sg.
	III. MEDISAVE REQUIRED AMOUNT
	CPF members who turn 55 and meet the Minimum Sum must set aside a Required Amount in their Medisave Account when they make a withdrawal. If members have less than the Required Amount in their Medisave Account, their Ordinary and/or Special Account balances in excess of their Minimum Sum will be used to top up the Required Amount. This is to enable members to have enough savings to meet their healthcare needs during old age.
	From 1 January 2008, the Required Amount will be raised from the current $11,500 to $14,000, after adjusting for inflation. The Required Amount will increase by $2,500 (in 2003 dollars) each year until it reaches $25,000 (in 2003 dollars) on 1 January 2013.
	IV. HOUSING WITHDRAWAL LIMIT
	To encourage prudence in the use of CPF savings the cap on the CPF withdrawal limit for the purchase of private residential properties and HDB flats financed with bank loans will be reduced from the current 126% to 120% of the Valuation Limit.
	V. CPF INVESTMENT SCHEME - LOWER EXPENSE RATIOS
	From 1 January 2008, expense ratios1 on new investments in funds (unit trusts and investment-linked insurance products) under CPF Investment Scheme must not be higher than that shown in Annex B. The Board will review these ratios from time to time.
	The rule that sales charges must not exceed 3% kicked in on 1 July 2007. CPF members who have already invested in such funds will not be required to redeem their investments. However, if they wish to switch from these funds to other CPFIS funds, they can do so free of charge within a stipulated timeframe. The insurers and fund management companies will notify members of their options and facilitate the switching.
	The Board would like to remind members that charges on their investments are only one of the factors affecting returns. Members must also take into account their investment objective and risk appetite and adopt a long term view when they are making their investments.
	1The expense ratio will be based on the fund’s audited expenses for its latest financial year.
	PUBLIC ENQUIRIES For enquiries, members of the public can call the CPF Call Centre at 1800-227-1188 or visit www.cpf.gov.sg.
	Annex A
	Computation of Special, Medisave and Retirement Accounts (SMRA) interest rates for January to March 2008 Average yield of 10-Year SGS from Dec 06 to Nov 07 2.90% (Note 1) Plus 1% 1.00% Computed SMRA Interest Rate for Jan 08 to Mar 08 3.90% SMRA Interest Rate (Jan 08 to Mar 08)   4.00% (Note 2)
	Note:
	1. Source: Yields of 10-Year Singapore Government Securities are obtained from www.sgs.gov.sg
	2. A floor of 4% for the SMRA rate will be maintained for two years from 1 January 2008. It will be lifted after 2 years, and the 2.5% floor rate will apply for all CPF accounts thereafter.
	Annex B

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

1.95

Medium to High Risk

1.75

Low to Medium Risk

1.15

Lower Risk

0.65