Seth’s Blog on Finance

CPF SMRA Minimum 4% Interest Extended to 31 Dec 2012

The government has decided to further extend the minimum 4% p.a. interest on Special, Medisave & Retirement Account (SMRA) until 31 Dec 2012. Money in SMRA which forms the first $60,000 of a CPF member’s combined balances will continue to earn 5% p.a.

I have met quite a few clients who were previously encouraged by other agents to invest their Special Account monies into various investment-linked policies (ILPs). As with most ILPs that are sold, there is no proper investment planning or asset allocation performed, neither is there much after-sale review or management.

As a result, most of the investments are not performing well and may even be underwater, while incurring additional opportunity costs of 4 to 5% offered by the Special Account. These clients are also not aware of the interest rate they were enjoying for their Special Account monies. I doubt they would have invested if they were informed of the interest rate.