Implementing CPF Lifetime Retirement Investment Scheme to Enable CPF Members an Option for Higher Expected Returns

7 Mr Shawn Loh asked the Minister for Manpower what are the considerations to implement the CPF Lifetime Retirement Investment Scheme, accepted by the Government in 2016, given that a typical investment portfolio of 65% equities and 35% bonds has earned 9.5% returns per annum over the past five years, and delaying the scheme's implementation may deprive CPF members an option to take risks to earn higher expected returns.

The Minister for Manpower (Dr Tan See Leng): Mr Speaker, the Ministry of Manpower (MOM) is in the final stages of studying how we can provide further support to Central Provident Fund (CPF) members to plan for their retirement through products that would strike the right balance between risk and return. We will provide updates when ready.

In the meantime, members who wish to invest their CPF savings for potentially higher returns can already do so through a number of low-cost funds under the CPF Investment Scheme.

Mr Speaker: Mr Loh.

Mr Shawn Loh (Jalan Besar): Thank you, Mr Speaker. It is often said that time in market is more important than timing the market for investments. And so, I am glad to hear the Minister's update that the Ministry is in the final stages of implementing the Lifetime Retirement Investment Scheme. For too long have Singaporeans been deprived of the simplified investment choices that the scheme had envisaged.

My question to the Minister is this: given the passage of time, would the Ministry also consider investing resources to educate the broad base of CPF members that can eventually benefit from this scheme? Can we invest a lot more resources to increase the level of financial literacy for the broad base of CPF members whose many CPF savings are still stuck in Ordinary Account, savings that are not used for housing and education, and can be better applied to earn a higher investment return on an expected basis?

Dr Tan See Leng: I thank the Member for his supplementary question. The straight answer is, of course, we will do that. When we have finalised the details of the provision of further support, in terms of planning their retirement through products, striking this optimal balance between risk and return, we will contemporaneously roll out publicity initiatives to educate the broad masses of our CPF members, hoping that they will benefit from it.

I wanted to also address the hon Member's point about timing the market and the time in the market. I fully agree with him. But I think we also have to be very mindful of the fact that whatever plan, whatever investment products that we eventually do end up working with the multiple big providers in the market to provide, we have to carefully study the impact of these proposed adjustments to our CPF system. For us, the penultimate objective has always been to safeguard retirement adequacy.

So, the different features, the parameters that strike this optimal balance between risk and return are quite essential for us.

If you look at the last few years, we have experienced significant market turbulence, significant investment headwinds. When we launch a particular product, any investor who had to liquidate his or her investment for retirement needs during a market downturn would have experienced, depending on how long he has been invested for, a significant drop in his asset value and that can impact adversely his retirement adequacy.

Of course, if you look back with the benefit of hindsight, it is always good to be able to time the market properly. But I think, in reality, looking forward is a more difficult endeavour.

But like I said, we are in the final stages. I do beg for the indulgence of the Member that once it is ready, we will be ready to announce the range of products.

Mr Speaker: Mr Louis Chua.

Mr Chua Kheng Wee Louis (Sengkang): Thank you, Speaker, and thank you for the update, Minister, on this. It might have saved me one cut for this year's Committee of Supply.

In terms of the launch of the Lifetime Retirement Investment Scheme, I just wanted to ask if this is something which is still part of the consideration set, in terms of this final review of the various options that Minister talked about. After all, it was back in 2016 when the Lifetime Retirement Investment Scheme was being accepted by the Government, and while we may be considering a various range of options when it comes to investing one's CPF, whether the Lifetime Retirement Investment Scheme still features in it and whether we can still expect an update by this year.

Dr Tan See Leng: I thank the Member for his supplementary question. I have shared earlier on that we are close to finalising the details. We will announce it at the appropriate time. We have taken guidance from the CPF Advisory Panel and we are in the process of studying how we can incorporate some of the features, because, obviously, a certain time has passed and the markets have also evolved.

As I have said earlier on, I beg for the indulgence and the patience of every Member in the House. When we are ready, we will announce it.

Mr Speaker: Last supplementary question. Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): Thank you, Speaker, for your indulgence. A quick follow-up on this. Minister, I do not want to entirely pre-empt what you will eventually announce, but I wonder if in considering the distribution of equities and bonds for the Lifetime Retirement Investment Scheme, whether the CPF Board will also consider the possibility of one that is fully directed toward the local market as an additional means of providing liquidity to our beleaguered Singapore Exchange (SGX).

Dr Tan See Leng: I thank the Member for his suggestion. The construct of the product will take into account different weightages on global equities versus bonds. It will also be a glide path, depending on when the member would enter into the particular product that we are looking at.

These are some of the considerations. Like I said, we are not ready to announce it yet because we are finalising the product.

As to which markets and so on, depending on how we work with — when the hon Member talks about the local market being beleaguered, actually, over the last couple of months, I think the SGX returns has been quite impressive. So, I may not necessarily agree with him on that point.