Are CPF funds mismanaged?

Are CPF funds mismanaged?

Central Provident Fund (CPF) funds are invested in Special Singapore Government Securities (SSGS), which are fully guaranteed by the Government, and risk free.

15 May 2016


There have been a few online articles recently relating to the management of CPF monies. One article alleged that our CPF has been “seriously mismanaged” by the CPF CEO. The article led some netizens to allege that the Government is “robbing” CPF members of their hard-earned money. There was also an online article which alleged that the CPF Board kept the difference between interest earned on new Special Singapore Government Securities (SSGS) issued at 4% interest per annum, and the interest paid on savings in the Ordinary Account (OA) of 3.5% on the first $20,000 and 2.5% on the rest of the OA savings, while another asked how the government was going to repay CPF monies if their investments were to fail. These articles are misleading.

To put the record straight, the CPF Board invests CPF members’ savings in SSGS, and the coupon rates which these SSGS earn for CPFB match the interest rates that CPF members receive. For example, for Ordinary Account savings earning a 2.5% interest rate, the corresponding SSGS will have a matching 2.5% coupon rate. On the other hand, for Special, Retirement and Medisave Account monies that are invested in SSGS paying a coupon of 4% per annum, CPF members will receive 4% on these balances. CPF members do not bear any investment risk at all in their CPF balances. The investment risk is borne by the Government. Their monies are safe, and the returns that they have been promised are fully guaranteed by the Government. This is a solid guarantee as the Singapore Government is one of the few remaining triple-A credit-rated governments in the world.   

The Government has already provided detailed explanations on how CPF monies are managed. The details on the management of CPF monies and how CPF interest rates are determined can be found on MOF’s website.

For CPF members who wish to take more risks in hope of higher returns, they can do so by investing their monies directly in the market through the CPF Investment Scheme (CPFIS).

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