Collective Investments for Pension Saving: Lessons from Singapore’s Central Provident Fund Scheme

25 Pages Posted: 21 Jan 2010 Last revised: 13 Nov 2013

See all articles by Benedict S. Koh

Benedict S. Koh

Singapore Management University - Lee Kong Chian School of Business

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Joelle H. Fong

National University of Singapore

Date Written: January 19, 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, Pension Research Council

Suggested Citation

Koh, Benedict S. and Mitchell, Olivia S. and Fong, Joelle H., Collective Investments for Pension Saving: Lessons from Singapore’s Central Provident Fund Scheme (January 19, 2010). Pension Research Council WP 2010-01. Available at SSRN: https://ssrn.com/abstract=1539021 or http://dx.doi.org/10.2139/ssrn.1539021

Benedict S. Koh

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joelle H. Fong

National University of Singapore ( email )

469C BUKIT TIMAH ROAD, LKYSPP
SINGAPORE, Singapore 259771
Singapore

HOME PAGE: http://https://lkyspp.nus.edu.sg/our-people/faculty/fong-hung-yee-joelle

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