The CPF Board just announced two new initiatives – Additional escalating payout option under CPF Life, and the Lifetime Retirement Investment Scheme (LRIS).
I want to focus on the LRIS and share my thoughts about it, the good, the bad, and some of my suggestions.
Before we go into that, let’s understand some of the LRIS features:
- Few options for passively managed funds
- Low cost
- Minimise buying and selling
- Increase returns
The Good – Limiting The Investment Options
I believe the Government understood that people suffer from overconfidence. With a CPF OA interest of 2.5%, it isn’t an attractive rate to most people. Some would prefer to take things in their own hands and invest CPF monies under the CPF Investment Scheme to get higher returns.
Sadly, the CPF reported that most members who invested their monies, or about 84% of them, did worse than the CPF OA’s interests of 2.5%.
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