Retiring in Comfort

We were commissioned by SGX to write a report on the Singaporean retirement landscape, in particular assessing the Government sponsored Central Provident Fund (CPF), to determine the opportunities for Singaporeans to enhance their retirement income by being able to invest more cost effectively and earlier in life within the CPF.

In the paper titled Retiring in Comfort, we construct a simulation model based on which we find that if investment costs were lowered to international standards and individuals could invest more freely in higher risk-return assets, the average expected monthly retirement income could increase by 16% as compared to the current status quo.

Enabling this would requiring replacing currently existing CPF restrictions (e.g. a minimum balance individuals must accrue before being allowed to invest) with new safeguards to limit investment risks for individuals, in particular as retirement approaches. One of the possibilities highlighted in the paper to address this are lifecycle funds that could offer a solution to allowing individuals to invest more effectively, while adjusting the risk profile over time. 

Retiring in Comfort