Process for Determining and Reviewing Investable Products in CPF Investment Scheme
Ministry of ManpowerSpeakers
Summary
This question concerns the criteria and review process for products under the CPF Investment Scheme (CPFIS), as raised by Ms Tin Pei Ling. Minister for Manpower Mrs Josephine Teo explained that restrictions prevent excessive risk to retirement savings while offering a range of products including bonds, shares, and unit trusts. She stated that since 2006, new CPFIS funds must rank in the top 25th percentile of their global peer group and meet expense ratio caps. The CPF Board conducts ongoing reviews of products and providers to ensure they remain relevant for members looking to diversify their portfolios. These measures aim to balance investment flexibility with the primary goal of safeguarding members' interests and their retirement nest eggs.
Transcript
94 Ms Tin Pei Ling asked the Minister for Manpower (a) what is the rationale for restricting investable products under the CPF Investment Scheme; (b) how are the approved investment products determined; (c) how frequent is this list of approved products reviewed; and (d) whether Singaporeans can choose to invest in products not in the approved list on a conditional basis.
Mrs Josephine Teo: The primary purpose of CPF is to help members save for retirement. Members earn risk-free interest of up to 6% per annum on their CPF balances. Members who are prepared to take some risks may do so through the CPF Investment Scheme (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, CPF Board sets limits on the amounts that can be invested as well as the products available under CPFIS.
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, exchange-traded funds, shares and gold products.
Managed investment products and providers are reviewed before they are available through CPFIS. For example, since 2006, all new CPFIS funds must be in the top 25th percentile of funds in their global peer group and have an expense ratio below the cap in their risk category.
To ensure that the list of CPFIS products and providers remains relevant, the CPF Board will continue to review it on an ongoing basis. This strikes a balance between allowing CPFIS participants the flexibility to diversify their investment portfolios to enhance their retirement nest eggs, while safeguarding members' interest.