Singaporeans presently have limited cost-effective options for equity investments for the Supplementary Retirement Scheme (SRS) account and the Central Provident Fund Ordinary Account (CPF OA).
For the SRS account, Singaporeans can invest in companies listed on the Singapore Exchange, while for the CPF OA, they can invest in Straits Times Index exchange-traded funds (STI ETFs) administered by either Nikko AM or SPDR.
While the option of investing in unit trusts and investment-linked products is available, these have high expense fees and often involve hidden costs.
It is important to have a diversified, low-cost equity exposure for long-term retirement planning.
While the STI ETF provides diversification across the top 30 Singapore-listed companies, there is a high home bias if one has to invest only in STI ETFs or securities listed on the Singapore Exchange.
The overseas equity ETF options available on the Singapore Exchange have higher expense ratios, and are subjected to higher withholding taxes for dividends, compared with those listed on the London Stock Exchange.
The variety of ETFs available on the London Stock Exchange, in terms of geographical exposure and asset classes, is also superior, compared with those listed on the Singapore Exchange.
I hope that the Ministry of Finance and CPF Board will allow Singaporeans to invest in overseas-listed securities for their SRS and CPF OA investments.
The Government would do well to ensure that low-cost, diversified options are available to ensure that Singaporeans can make their money work hard in their golden years.
Chiam Sheng Shi