Changes to CPF investment schemes lower cost for investors
Singaporeans who make use of the CPF Investment Scheme (CPFIS) or are looking to start investing using the fund will soon pay less in fees.
Currently, financial advisers can receive a sales charge of up to 3 per cent of the transacted amount when members use their Central Provident Fund to purchase unit trusts and investment-linked insurance policies.
Second Minister for Manpower Josephine Teo said: "This sales charge has an unintended consequence that is detrimental to CPF members.
"It encourages financial advisers to sell products to earn more commissions."
The sales charge will be reduced to 1.5 per cent from Oct 1, and will be removed entirely from next October.
Ms Teo said that by removing the sales charge, financial advisers no longer have an incentive to push products.
The ministry will also reduce the maximum wrap fees charged for CPFIS investments to only the cost to maintain wrap accounts.This reduction will also be done gradually, to 0.4 per cent by next Oct.
The application for a CPFIS account will now come with a self-awareness questionnaire, to ensure that users are aware of their own investment knowledge and appetite, to ensure that they can be more independent in their investments.
- CHEOW SUE-ANN