In the latest annual profit and loss report by the Central Provident Fund Investment Scheme (CPFIS), up to 85%, or 760,000, of the 902,300 CPFIS investors could not make an annualized profit of more than 2.5%. In financial year 2014 ending Sep 30 last year, up to 40% made a loss from their CPFIS investments.

CPFIS investments are made using CPF Ordinary Account funds, and if left untouched, the CPF Ordinary Account will generate a 2.5% interest return annually. However, as Singapore’s inflation rate averages 2.8% (from 1962 to 2014), many CPF account holders prefer to take up risk and invest in CPFIS funds approved by the CPF, to losing value over the long term to inflation. The typical funds approved by CPFIS are unit trusts and equity funds.

The CPF Ordinary Account interest rate of 2.5% has been stagnated since 2005 – under Prime Minister Lee Hsien Loong’s premiership and his wife’s stewardship of the sovereign wealth fund company Temasek Holdings.

Graph from Roy Ngnerg
Graph from Roy Ngnerg