Misleading Advert on Transferring CPF OA to SA? 2
Happen to come across a CPF advert on Today: First Step to a bigger nest egg. The advert states that ”Transferring his savings from his Ordinary Account to his Special Account allows savvy investor Jason Kuek to earn higher interest on his CPF savings“.
The advert describled the uncertainity in the job market, high inflation rate, typical spending pattern, a vague investment portfolio and the low interest rate environment. These are stuffs that remind the reader of the ‘advantages’ of the ‘high’ SA interest.
A caveat can be found on the right hand side of the ad informing of the irreversible transfer and concerns on using OA for housing purposes. A good sign that such important info are mentioned. However, nothing was mentioned on the 2 years limit on the min floor rate of 4%, the new floor rate of 2.5% thereafter and the pegging of interest rate to the 10 Year Singapore Government Securities (10YSGS) yield.
I find some conflicting information on the ad. But disclaimer first, I have nothing against Mr Jason Kuek or CPF Board. Just some personal questions I have…
- Mr Jason Kuek mentioned that “I am looking to hold them (shares) for the long term, and its a very good time to invest in Singapore blue chips because price is very low”. At the same time, he puts half his monthly salary into a savings account “even thought he reckons that “interest rates are so low right now that putting money in the bank is as good as doing nothing with it“”. To give the ad the benefit of the doubt, Mr Kuek could be building up more emergency funds to cope with the job uncertainty or he could be a high income earner and even after putting away half his salary and using the bulk of his expenditure on his car and insurance, he still has enough for investments.
- As with point 1, Mr Kuek mentioned that “Basically, at this point, if I have the opportunity to increase my funds (SA), I will.” Why transfer to SA now when there are much more investment opportunities in OA at a “…good time to invest…”?
- Mr Kuek’s long term goal is to buy an apartment of his own eventually. Now, transferring OA to SA is irreversible. OA can be used to pay for housing. Hmmm… OK, maybe he is able to pay for his future home using cash, bank savings or his investment returns…
Sometimes, I really wonder why is CPF Board spending so much money on such advertisements to persuade people to lock up their money and not be able to use it for anything until retirement. I am not suggesting that locking up money is necessary bad for everyone. This could be a ‘lesser evil’ to protect you from yourself.
And, by the way, the ad mentioned a Jason Kuek while the photo shows a Jason Ho…. Are they the same guy?…
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Our government knows that most people who used their CPF for investment are losing money. They will rather that these people lock their money in Special Account and make sure they have enough money for their CPF Life in future.
Hi Adrian,
Yes, that might be a reason for enticing the SA transfer.
However, it seems to me that they are trying to solve a problem by adding more things and complicating the whole situation.
I remember when I was still in uni, a Dutch lecturer mentioned that our government like to do what I mentioned above. I did not really appreciate what he was saying at that time. Now, I finally understand…