Enhancing CPF Returns

MP Louis Chua

Mr Chua Kheng Wee Louis (Sengkang): Chairman, on the topic of enhancing CPF returns, I would like to once again take the chance to raise concerns that I have previously voiced out in Parliament in the past two years. The CPF scheme plays an important role in securing Singaporeans’ retirement needs and it is after all the CPF Board’s mission.

An opportunity to enhance these returns is therefore something which many Singaporeans continuously look out for. The long lines at the banks recently due to the promotional fixed deposit rates is evidence enough of this demand. In the past month alone, major banks such as OCBC and DBS, have begun offering additional products for investors to allocate their CPF Ordinary Account (OA) monies to. OCBC is now offering 8-month deposits at an interest rate of 3.88%, while DBS now accepts online applications for T-bill investments using CPF OA funds. Again, the long lines forming suggest that Singaporeans need for higher quality returns to their OA funds is largely unmet. The excess demand for these additional OA investment products despite their rather modest long-term returns as compared to a globally diversified portfolio of ETFs for example, further shows that there is pent-up demand for more investment options that need to be satiated.

In Budget 2021 and 2022, I sought clarification on the CPF Lifetime Retirement Investment Scheme (LRIS). Last year, I asked if the Expert Investment Council had completed their studies and if the Government was still considering rolling out the LRIS. Minister Tan See Leng assured us that the Government is still evaluating the scheme and I would like to once again check in if there has been any conclusion on their studies since then.

It is, after all, close to seven years since August 2016 when the plans were first announced. Is there a more concrete timetable on which the Ministry can share details of the proposed LRIS? I hope the Ministry is cognisant that the longer the delay, the higher the opportunity cost and real cost to Singaporeans’ retirement savings.

Moreover, I would like to reiterate the lack of options currently available to Singaporeans to allow them to take better control of the wealth they have. Since my speech last year, there are still only six Exchange-traded fund (ETFs) available for Singaporeans to invest in. With increasing financial literacy among our people, they should be empowered to take greater charge of their investment decisions according to their risk appetites and financial goals.

Ministry of Manpower
1 March 2023


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