Review of CPF Investment Scheme Given Continued Losses

Debated in Parliament on 10 Oct 2016.

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Foo Mee Har highlighted that 38% of CPFIS investors suffered losses and only 16% achieved returns above the 2.5% CPF Ordinary Account interest rate, urging an urgent review of the scheme.
Lim Swee Say acknowledged the high-risk nature of CPFIS, noting that 84% of investors underperformed the risk-free CPF rate and that members must understand and accept investment risks.
The CPF Advisory Panel recommended targeting CPFIS at knowledgeable investors and introducing a simpler Lifetime Retirement Investment Scheme (LRIS) for those who find CPFIS complex or time-consuming.
The Government accepted these recommendations and will review CPFIS and study the LRIS, with more details to follow.

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Full Transcript

Foo Mee Har

Ms Foo Mee Har asked the Minister for Manpower whether the Ministry will consider reviewing the CPF Investment Scheme (CPFIS) urgently given that 38% of investors have suffered losses through CPFIS and only 16% of investors in the scheme managed to achieve better than the 2.5% interest rate they would have otherwise earned by leaving their money in the CPF Ordinary Account.

Lim Swee Say

CPFIS was introduced in 1986 to give CPF members an option to invest and manage their CPF savings. CPF members are made aware that they must understand and accept the risk of their investment choices. There are over 700 products to choose from under CPFIS. They should, therefore, choose CPFIS investments that match their risk tolerance and investment objectives. There is now $24 billion invested through CPFIS, of which the majority are from the Ordinary Account.

In the past five financial years, about 16% of CPFIS-OA investors were able to realise higher returns than the risk-free OA interest rate offered by CPF. However, the other 84% of CPFIS-OA investors did not. In other words, the majority of CPFIS-OA investors would have been better off leaving their savings in their OA to earn the default interest rate, currently at 2.5%.

The CPF Advisory Panel made a similar observation in its report that was released in August 2016. Hence, the Panel has recommended that the Government review the current CPFIS to better target it at knowledgeable CPFIS investors who feel confident of managing their investments on their own and have the time to do so. Along with the review of the CPFIS, the Panel also recommended that the Government introduce the Lifetime Retirement Investment Scheme, or the LRIS for short, as a simpler investment option. The LRIS will cater to CPF members who wish to invest their CPF savings but find the CPFIS too complex and onerous or find it too time-consuming to actively manage their investments.

The Government has accepted the Panel's recommendation to review the CPFIS and to study the LRIS. More details will be released later.

Summary written by AI (learn more)

Foo Mee Har highlighted that 38% of CPFIS investors suffered losses and only 16% achieved returns above the 2.5% CPF Ordinary Account interest rate, urging an urgent review of the scheme.
Lim Swee Say acknowledged the high-risk nature of CPFIS, noting that 84% of investors underperformed the risk-free CPF rate and that members must understand and accept investment risks.
The CPF Advisory Panel recommended targeting CPFIS at knowledgeable investors and introducing a simpler Lifetime Retirement Investment Scheme (LRIS) for those who find CPFIS complex or time-consuming.
The Government accepted these recommendations and will review CPFIS and study the LRIS, with more details to follow.

Questions identified by AI (learn more)

Review of CPF Investment Scheme Given Continued Losses

Debated in Parliament on 10 Oct 2016.

Summary written by AI (learn more)

Foo Mee Har highlighted that 38% of CPFIS investors suffered losses and only 16% achieved returns above the 2.5% CPF Ordinary Account interest rate, urging an urgent review of the scheme.
Lim Swee Say acknowledged the high-risk nature of CPFIS, noting that 84% of investors underperformed the risk-free CPF rate and that members must understand and accept investment risks.
The CPF Advisory Panel recommended targeting CPFIS at knowledgeable investors and introducing a simpler Lifetime Retirement Investment Scheme (LRIS) for those who find CPFIS complex or time-consuming.
The Government accepted these recommendations and will review CPFIS and study the LRIS, with more details to follow.

Questions identified by AI (learn more)

Full Transcript

Foo Mee Har

Lim Swee Say

The Government has accepted the Panel's recommendation to review the CPFIS and to study the LRIS. More details will be released later.

Summary written by AI (learn more)

Foo Mee Har highlighted that 38% of CPFIS investors suffered losses and only 16% achieved returns above the 2.5% CPF Ordinary Account interest rate, urging an urgent review of the scheme.
Lim Swee Say acknowledged the high-risk nature of CPFIS, noting that 84% of investors underperformed the risk-free CPF rate and that members must understand and accept investment risks.
The CPF Advisory Panel recommended targeting CPFIS at knowledgeable investors and introducing a simpler Lifetime Retirement Investment Scheme (LRIS) for those who find CPFIS complex or time-consuming.
The Government accepted these recommendations and will review CPFIS and study the LRIS, with more details to follow.

Questions identified by AI (learn more)

Review of CPF Investment Scheme Given Continued Losses | PAPERCUTS

Review of CPF Investment Scheme Given Continued Losses

Summary

Questions Identified

Full Transcript

Foo Mee Har

Lim Swee Say

Summary

Questions Identified

Review of CPF Investment Scheme Given Continued Losses

Summary

Questions Identified

Full Transcript

Foo Mee Har

Lim Swee Say

Summary

Questions Identified