‘S’pore people drool to have these return rates’: S’pore financial guru says M’sia’s EPF offers higher returns than CPF

Singapore financial guru says Malaysia’s EPF offers higher returns than CPF

A financial guru from Singapore praised Malaysia’s Employees Provident Fund (EPF) for having high return rates — much higher than Singapore’s Central Provident Fund (CPF).

Mr Loo Cheng Chuan compared the neighbouring countries’ provident funds in an interview on the YouTube channel “Do More – Take Charge of Your Life”, hosted by financial journalist Khoo Hsu Chuang on 4 Mar.

Mr Loo is a former corporate employee who transitioned to being a non-profit financial educator in 2015.

He teaches Singaporeans how to become “millionaires by the time they retire” through the CPF, which he called a “wealth-building machine”.

For this endeavour, he was awarded the Public Sector Transformation Award in 2018.

Financial guru calls EPF a “gold mine”

During the interview, Mr Loo described the EPF as a “gold mine”, but Malaysians tend to underestimate its power as a “wealth-building engine”.

“The EPF return rates are extremely high, even higher than the Singapore EPF system,” Mr Loo said.

Singapore only has a 2.5% return rate for ordinary accounts — which Mr Loo says is “hardly enough to beat inflation” — while the more restrictive special account and the Medisave account have a 4% return rate.

On the other hand, the EPF return rate — which is based on dividends and varies each year — has had return rates over 5% and even reached 6.9% in 2017.

“Singapore people drool to have [sic] these return rates,” Mr Loo expressed.

Mr Khoo argued that Singapore’s high salary allows people to save more despite CPF’s lower return rate, but Mr Loo disagreed.

“What you lack in powerful income is made up and more than compensated by a powerful compounding rate that your EPF give you,” he explained.

He said that if one person puts MYR 100,000 in EPF and another puts an equivalent amount in SGD in CPF, the EPF’s return rate will eventually overtake CPF.

Each provident fund system has its pros & cons

However, when asked which of the provident funds he prefers or thinks more superior, Mr Loo says each of them has their pros and cons.

EPF has higher return rates but may be more volatile due to the political climate in Malaysia, while Singapore offers stability and guaranteed returns but has lower return rates.

As such, Mr Loo stressed the importance of knowing how to take advantage of your country’s provident fund system.

Also read: CPF Special Accounts of 1.4M members closed on 19 Jan, savings transferred to Retirement Account

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Featured image from Do More – Take Charge of Your Life on YouTube, The Vibes.