CENTRAL PROVIDENT FUND MEMBERS (Statistics of profits/losses from investments)

The following Question stood in the name of Mr Chng Hee Kok

Mr Chng Hee Kok: To ask the Minister for Manpower if he will provide statistics of the Central Provident Fund members who have profited or lost from investments at the latest available date.

Mr Choo Wee Khiang (Jalan Besar): Question No. 9, Sir.

Dr Lee Boon Yang: Mr Speaker, Sir, 12 per cent of total CPF investors or about 50,000 CPF members made net realised profits from October 1996 to September 1997. 90 per cent of these members or about 46,000 members achieved less than $5,000 each in net realised profits.

Although about 83 per cent of total CPF investors made profits on their CPF investments, about 310,000 of them had profits which were less than the CPF interest they would have earned in their CPF accounts, had they not used their CPF savings for investment. Hence, after offsetting for the CPF interest, these members do not have any net realised profits available for withdrawal.

The remaining 17 per cent of CPF investors incurred realised losses, even before offsetting for the CPF interest. Of these, 76 per cent or about 56,000 members made losses of less than $1,000.

Sir, the depressed stock market has added to the poor performance of CPF members' investment. It is also noteworthy that CPF members usually choose to invest on the local share market themselves rather than place their savings with professional fund managers in the form of unit trusts and fund management accounts. Secure and successful financial investments require adequate pooling of funds for more efficient portfolio management to reduce investment risks and achieve good returns over the long term. Most CPF members may not have a good understanding of financial investments and hence are unable to construct sound long-term portfolios to diversify investment risks. They also have relatively small balances to construct a meaningful portfolio of investments.

Sir, the Government is therefore looking into the further refinement and liberalisation of the CPF Investment Scheme to give members more options to invest with professional fund managers. Members can choose from more fund managers and unit trusts. The fund managers of CPF-approved unit trusts will have greater flexibility to diversify portfolios to maximise risk-adjusted returns for CPF investors. In addition, the new rules to require greater disclosure of investment information by the fund managers will enable CPF investors to make better informed investment choices. Details of the changes will be announced soon.