Collective investments for pension savings: Lessons from Singapore's central provident fund scheme

Collective investments for pension savings: Lessons from Singapore's central provident fund scheme

Singapore's mandatory national defined contribution pension system permits participants to invest their retirement savings in a wide range of investment instruments if they wish, rather than leaving their savings in Central Provident Fund (CPF) accounts to earn interest rates by default. This a...

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Bibliographic Details
Main Authors: KOH, Benedict S., Mitchell, Olivia S., FONG, Joelle H. Y.
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2010
Subjects:
pension
retirement
investment
portfolio
investment choice
return and risk
Singapore
Asian Studies
Finance and Financial Management
Portfolio and Security Analysis
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/3006
https://ink.library.smu.edu.sg/context/lkcsb_research/article/4005/viewcontent/SSRN_id1539021.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:Singapore's mandatory national defined contribution pension system permits participants to invest their retirement savings in a wide range of investment instruments if they wish, rather than leaving their savings in Central Provident Fund (CPF) accounts to earn interest rates by default. This article asks whether workers seeking to earn higher returns can expect to do better than the CPF-managed default, by moving their money into professionally managed unit trusts. We use historical data to investigate whether fund managers possess superior stock picking and market timing skills, as well as whether they exhibit persistence in performance and offer diversification benefits to participants. The evidence is mixed, which could explain why so few participants opt out of the CPF-run default fund.

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