Headed by the Chairman of the CPF advisory panel, a focus group of 40 people started the first discussion session on expanding the CPF Investment Scheme (CPFIS) with greater investment flexibility yesterday (July 29). The recommendations by the focus group will be released by the end of the year.
In the discussion, four fuzzy options were offered and participants’
opinions were sought on their preference:
1) Fewer investment options that offer “a good mix of risk returns”
2) Investment options that are “well-diversified and passively managed”
3) Automatically reduce investment funds risk as members get near retirement age of 67
4) Options to invest “for the long term”
There is no explanation on the options given and there is no difference from the existing CPFIS scheme.
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.
CPF has been a major issue in recent years when there is an increasing number of Singaporean elderly who have to continue working after the retirement age of 67 as their CPF is insufficient.
Singaporeans’ worries are compounded further when Minimum Sum increased to S$161,000 as of 2015. As most Singaporeans spent a bulk of their CPF on housing, most of them are unlikely to meet the Minimum Sum and hence repeating the rat race in their twilight years.
The CPF retirement problem stem from the low interest rate offered at 2.5%, which leaks value to the annual inflation of 3-4%. In 2014, the Singapore Prime Minister Lee Hsien Loong sued an internet blogger, Roy Ngerng, for defamation when the latter questioned the generous return (16% for Temasek Holdings, undisclosed for GIC) of the two sovereign wealth fund companies, where one is incidentally managed by the Prime Minister’s wife, as compared to the CPF return of 2.5%.