Limited Number of Exchange-Traded Funds under CPF Investment Scheme
Ministry of ManpowerSpeakers
Summary
This question concerns the limited number of exchange-traded funds (ETFs) under the CPF Investment Scheme (CPFIS) and the exclusion of ETFs not listed on the Singapore Exchange. Mr Chua Kheng Wee Louis inquired about the rationale for these restrictions and the perceived exclusion of Special Account savings. Minister for Manpower Mrs Josephine Teo clarified that both Ordinary and Special Account savings can be used for ETF investments, subject to providers' commercial decisions and meeting criteria regarding fees and track records. She stated that only locally listed or registered products are included to safeguard members from foreign regulatory risks. These policy limits are designed to protect retirement savings while allowing members to pursue potentially higher returns through a reviewed list of products.
Transcript
41 Mr Chua Kheng Wee Louis asked the Minister for Manpower what is the rationale for (i) the limited number of exchange-traded funds (ETFs) under the list of investment products under the CPF Investment Scheme (ii) the exclusion of use of CPF Special Account savings for investments in ETFs and (iii) the exclusion of ETFs not listed on the Singapore Exchange.
Mrs Josephine Teo: CPF members enjoy risk-free interest of up to 6% per annum on their CPF balances. Those who are prepared to take some risk to earn potentially higher returns may do so through the CPF Investment Scheme or CPFIS.
There is a wide variety of investment products available in the market. Members also vary greatly in their knowledge and understanding of these products. To prevent excessive risk to retirement savings, the CPF Board sets limits on the products available under CPFIS as well as the amounts that can be invested in certain investment products.
Notwithstanding these limits, members have access to a range of investment products of varying risk profiles. These include bonds, fixed deposits, insurance policies, unit trusts, shares, gold products and exchange-traded funds or ETFs.
The CPF Board allows both CPF Ordinary Account and Special Account monies to be invested in ETFs under CPFIS and welcomes more ETFs to join CPFIS. However, ETF providers’ decision to apply for inclusion are ultimately based on their own commercial assessment. To safeguard members’ interest, the CPF Board carefully considers factors such as the investment-related fees and the track record of the products before approving any such applications. In addition, only products listed under the Singapore Exchange or registered with local authorities are included under CPFIS, as foreign products are subject to changing regulations in jurisdictions over which we have no oversight.
The CPF Board will continue to review the list of CPFIS products and providers to ensure it remains relevant.