Business

Most members in CPF Investment Scheme made a profit last year

Good results for those who invested OA savings under CPF Investment Scheme

Members who invested their Central Provident Fund (CPF) Ordinary Account savings under the CPF Investment Scheme (CPFIS) generally made a profit in the 12 months to Sept 30 last year.

The CPF Board said 441,000 members - or 78 per cent of the total CPFIS-Ordinary Account investors who invested their Ordinary Account savings - made profits in excess of the CPF-Ordinary Account interest rate of 2.5 per cent per annum.

The board attributed the positive performance last year to improving financial markets. It has changed the methodology used to measure performance to get a more rounded idea of how members' investments made through Ordinary Account savings are performing.

For the previous year ended Sept 30, 2015, the proportion of members in this category is 27 per cent, or 159,000 members based on the new methodology.

Besides excluding members with no investments in CPFIS, the new formula assesses not only realised profits and losses of investments that were sold but also unrealised profits and losses that members held during the reporting period.

To reflect longer-term performance, the board is providing the cumulative profits or losses over time.

Mr Michael Lim, executive director of the Investment Management Association of Singapore, said including unrealised gains or losses is more indicative of proper market values, while excluding members with no investments in CPFIS makes comparison numbers more relevant.

  • 78%

    Percentage of CPFIS-Ordinary Account investors who invested their Ordinary Account savings and made profits in excess of the CPF-Ordinary Account interest rate of 2.5 per cent per annum

Based on the new methodology, the number of CPFIS-Ordinary Account investors who had investments during the reporting period amounted to about 567,000 last year, down from 583,000 in 2015.

Under the scheme, CPF members can invest in CPFIS-included funds such as approved unit trusts and stocks after setting aside $20,000 in their Ordinary Account and $40,000 in their Special Account.

The total amount of Ordinary Account savings invested as at Dec 31 last year amounted to $18.14 billion, while $5.03 billion of Special Account savings were invested.

About 60,000 members - or 10 per cent - made total profits equal to or less than the CPF-Ordinary Account interest rate of 2.5 per cent for the year to Sept 30 last year, compared with about 84,000 (15 per cent) in 2015.

About 66,000 members (12 per cent) made total losses last year, compared with about 340,000 in 2015.

Over the two financial years from Oct 1, 2014, to Sept 30 last year, about 293,000 members made cumulative total profits in excess of the CPF-Ordinary Account interest rate of 2.5 per cent per annum.

About 128,000 made cumulative total profits equal to or less than the CPF-Ordinary Account interest rate. The remaining 172,000 members made cumulative total losses.

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