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UNDER the CPF Investment Scheme (CPFIS), members who wish to invest their CPF funds must open a CPF Investment Account with one of the three CPFIS agent banks. When members want to transfer their CPF funds to fixed deposits to earn more interest, the funds move from the CPF Ordinary Account to the CPF Investment Account with the CPFIS agent bank and then to the fixed-deposit account.
When the fixed deposit matures, one would expect the funds to move back to the CPF Ordinary Account immediately. That is not what happens. Unless specific instructions are given by the CPF member, the funds sit in the low interest-earning CPF Investment Account for up to two months.
As stated on the CPF website, the CPFIS agent bank will only 'automatically transfer the cash balance held in your CPF Investment Account to your CPF Ordinary Account (at the end of the month) if your Investment Account has been inactive (that is, if you have not made any investment transactions) for two consecutive months'.
Given that interest paid on funds in the CPF Investment Account is about 0.25 per cent, CPF members who are unaware of this time lapse before CPFIS agent banks transfer funds back to the CPF Ordinary Account will end up losing over 2 per cent of interest for up to two months. If a sum of $200,000 is involved, for example, the loss of interest is almost $750.
As there are no charges involved in transferring funds from the CPF Ordinary Account to the CPF Investment Account and vice versa, why should there be any delay in transferring funds back to the CPF Ordinary Account? Even if the delay is in anticipation of further investments by the CPF member, a two-month period is unduly lengthy. Three days should be more than adequate.
Thomas Mathew Koshy
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