Savings in CPF Funds Hit

Investments of retirement savings in stocks and units trusts made under the Central Provident Fund Investment Scheme (CPFIS) have taken quite a hammering in the global market meltdown.

Nearly half of all CPFIS investors who sold their Ordinary Account investments in the year ended Sept 30 - 440,000 CPF members, or 49 per cent - have lost money, up from 43 per cent a year earlier.

One such investor, school teacher Ms Catherine Lee, 40, got cold feet after her CPFIS investment lost 30 per cent. She could not stomach any more losses. 'I made a loss of $10,000 after selling off my unit trust investment in September. The market was very volatile. I preferred to bite the bullet and realise the loss rather than to wait and see.'

Another 279,000 or 31 per cent of OA investors made modest profits but would have been better off, or done just as well, leaving the cash to earn the Ordinary Account 2.5 per cent interest rate. This was up from 29 per cent a year earlier.

Only about 174,000 members, or 20 per cent - down from 28 per cent - made profits from their CPF savings over and above the 2.5 per cent they could have earned anyway.
For everyone else, who left their investments in place rather than sell, the picture was also quite bleak.

Overall, CPFIS investments in stocks, units trusts and property funds were well in the red, on paper. Only bonds, as well as gold, were in the black.
The CPF board attributed the poor performance to the financial meltdown which has hurt investment returns.

'The market has turned sharply from the bull market in 2007 to a bear market this year. Well-known financial institutions taking massive write-down coupled with a series of collapses such as Bear Stearns, Fannie Mae, Freddie Mae, Lehman Brothers and AIG injected much panic and volatility in the market,' it said.

Straits Times 22 Dec 2008