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May 12, 2011
Let GIC manage savings of CPF members
I CONGRATULATE the Government of Singapore Investment Corporation (GIC) on its 30th anniversary for admirably investing Singapore's reserves ('PM: New govt to seek political support for policies'; Tuesday).
Singaporeans can currently leave their funds with the Central Provident Fund (CPF) Board, or invest them through the CPF Investment Scheme (CPFIS).
The CPF ordinary account currently returns 2.5 per cent interest, and the special account 4 per cent. These are good returns given the low risks, but inappropriate for a long-term retirement fund, which needs to beat inflation.
Investing through the CPFIS requires the ability to pick the right funds, but investors often select funds that are not well-diversified and which charge too high fees. A better alternative would be to give Singaporeans the option of having their CPF money managed by GIC.
MM Lee has said that compared with the popular high-return asset class of equities, which returned 10.2 per cent per annum in nominal US dollar terms since 1981, the GIC portfolio made comparable returns with less risk.
This is far better than what the CPF Board currently offers.
Choo Shuo-yen
May 12, 2011
Let GIC manage savings of CPF members
I CONGRATULATE the Government of Singapore Investment Corporation (GIC) on its 30th anniversary for admirably investing Singapore's reserves ('PM: New govt to seek political support for policies'; Tuesday).
Singaporeans can currently leave their funds with the Central Provident Fund (CPF) Board, or invest them through the CPF Investment Scheme (CPFIS).
The CPF ordinary account currently returns 2.5 per cent interest, and the special account 4 per cent. These are good returns given the low risks, but inappropriate for a long-term retirement fund, which needs to beat inflation.
Investing through the CPFIS requires the ability to pick the right funds, but investors often select funds that are not well-diversified and which charge too high fees. A better alternative would be to give Singaporeans the option of having their CPF money managed by GIC.
MM Lee has said that compared with the popular high-return asset class of equities, which returned 10.2 per cent per annum in nominal US dollar terms since 1981, the GIC portfolio made comparable returns with less risk.
This is far better than what the CPF Board currently offers.
Choo Shuo-yen
