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Cap of CPF Wrap Fee for Fund Investments
Since 2006, the CPF Board has been undertaking measures to progressively lower the cost of investment and improve the quality of funds under the CPF Investment Scheme (CPFIS).
From 1 July 2012, the CPF Board will subject the wrap fee charged for CPF Investment Scheme (CPFIS) investments to a maximum limit of 1% per annum.
A wrap fee is a regular charge paid to financial advisers for providing bundled investment services, such as advisory, brokerage and administrative services. Also known as an ongoing fee, the wrap fee is typically levied quarterly by liquidating a small portion of the investment.
This new cap on wrap fees is meant to help members lower the costs of investing their CPF savings over the longer term.
The wrap fee cap will only affect CPFIS investors who have opened a wrap account with financial adviser firms, via any of the 3 CPFIS Investment Administrators (IAs) for their CPF-funded unit trust investment, before 1 Jul 2012. Currently, they can be charged a wrap fee of up to 1.5% per annum by their financial advisers.
About 30% of the 100,000 CPFIS wrap accounts are paying more than 1% per annum in wrap fees.
How much wrap fee are you paying?