Business Economics and Public Policy Papers

Document Type

Journal Article

Date of this Version

5-2010

Publication Source

Pensions: An International Journal

Volume

15

Issue

2

Start Page

100

Last Page

110

DOI

10.1057/pm.2009.33

Abstract

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.

Copyright/Permission Statement

The final publication is available at Springer via http://dx.doi.org/10.1057/pm.2009.33

Keywords

pension, retirement, investment, portfolio, investment choice, return and risk

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Date Posted: 27 November 2017

This document has been peer reviewed.