Correspondence: Joelle H.Y. Fong, Department of Insurance and Risk Management, The Wharton School, 3620 Locust Walk, St 3000 SHDH, Philadelphia, PA 19104-6320, USA. Tel: +1 215 898 0424; Fax: +1 215 898 0310; E-mail: hfong@wharton.upenn.edu

¹is an associate professor of finance, and Director of the MSc in Applied Finance at the Singapore Management University. He was formerly Vice Dean of the National University of Singapore Business School. Prior to joining academia, he was a corporate banker at the Chase Manhattan Bank N.A. He has also published five books and numerous articles related to the topic of money management and his teaching and research interests are in corporate finance, investment management, personal finance and financial markets.

²is the International Foundation of Employee Benefit Plans Professor of Insurance and Risk Management at the Wharton School, University of Pennsylvania. She recently completed an appointment on the Advisory Board for the Singapore Central Provident Fund and has served as a visiting professor at the Singapore Management University. Her main areas of interest are private and public insurance, risk management, public finance and labour markets, and compensation and pensions with both an American and an international focus.

³is currently a doctoral candidate in the Department of Insurance and Risk Management at The Wharton School, University of Pennsylvania. She has an MSc in Applied Finance from the Singapore Management University and a Bachelor in Accountancy (Honors) from Nanyang Technological University. She is also a CPA and worked in various government agencies within the Singapore Civil Service for six years prior to pursuing her doctoral studies. Her research interests are in pensions, risk management, finance and public policy.

Received 21 February 2008; Revised 21 February 2008.

Abstract

Retirement systems are increasingly asked to do an ever-better job of enhancing the performance of pension investments. The Singaporean Central Provident Fund permits pension system participants to keep their money in a government-run investment pool, or if they wish, they may select professionally managed unit trusts for their retirement accumulations. Opting for investment choice also exposes members to additional investment costs not charged by the government-managed account. This paper explores the charges levied by the private fund managers and we show that foreign ownership, active style of management and equity/balanced funds tend to be most expensive. We conclude with a discussion of policy options available to reduce retirement system costs.