Title
Collective Investments for Pension Saving: Lessons from Singapore’s Central Provident Fund Scheme
Document Type
Working Paper
Date of this Version
1-1-2010
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 CPF accounts to earn interest rate by default. This paper 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.
Keywords
Pension, retirement, investment, portfolio, investment choice, return and risk, trusts, managers, Singapore
Working Paper Number
WP2010-01
Copyright/Permission Statement
All opinions are solely those of the authors who acknowledge research support from the Wharton-SMU ResearchCenter at Singapore Management University, and the Pension Research Council at The Wharton School of the University of Pennsylvania. Copyright 2010 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.
Acknowledgements
Without implicating him, we acknowledge research assistance from Dimas Adrian Wijaya.
Date Posted: 07 August 2019