CPFIS changes that matter for the better
Sales charges to be capped, then removed a year later; cap on wrap fees to be cut to 0.7%, then to 0.4% next year
Add BT as a preferred sourceTHE recent announcement of the the reduction in CPF Investment Scheme (CPFIS) charges is a positive development. Sales charges will be capped at 1.5 per cent from October this year, and removed entirely a year later. The cap on wrap fees (an annual fee paid to financial advisers) will be reduced from the current 1 per cent to 0.7 per cent in October followed by a final cut to 0.4 per cent in October 2019.
While the developments are positive for investors from a cost perspective, the more pertinent issues stem from how one invests his or her CPFIS. According to Second Minister for Manpower Josephine Teo: "Over a two-year period between October 2014 and September 2016, 29 per cent of members who invested their Ordinary Account savings made cumulative total losses. Another 22 per cent achieved cumulative profit that was less than or just equal to the OA interest rate of 2.5 per cent per annum."
The period cited was a volatile time, given events such as the crash in Chinese equities in mid-2015 and Brexit in June 2016.
Share with us your feedback on BT's products and services
