Hi there are a few differences in EPF and CPF, I rmb this was discussed before.
1)EPF is a different structure from CPF.
Funds from EPF are invested directly into equities, shares of unlisted companies, issued as loans to organisations and bonds (aka like a fund manager managing a equities and bonds portfolio for you).
Funds from CPF are only invested directly into "special SG govt bonds"( aka like a fund manager who manages a bond portofilo for you). For this part, I will recommend reading up on the CPF statutory act.
2) The bonds invested in the respective funds are different
One of the major portfolio composition of EPF is in bonds. Being administer by the Malaysian govt, funds in EPF tend to be invested into Mal govt bonds. In Malaysia, the 10 yr coupon yields around 4% yield. Compare this to the 30 yr sg bond which yields at 3.375% and 10 yr SGS which yields around the low 2%s.
Remember the special govt bonds imentioned previously? Well the SG govt gives interest rates accordingly in 2.5%,3.5%,4% and 5%.
Therefore the above generally explains why our returns are different from EPF. Our CPF scheme is generally of a lower risk which invests in govt bonds in the range of 2.5-5%, while the EPF invests in equities/bonds etc. This results in the vast difference in returns. On a side note, one can say our CPF money is used to fund govt expenditure, whch alllows the govt to use money, which otherwise has to be spent on expenditure, to be invested in equities, take stakes in unlisted companies etc. Who enjoys the return of such investments in Singapore is debatable.
To zelphon,
The rise in 6%, can be explained by 1) inflation factor and 2) the govt increasing the MS in 2003 dollar figure to a target of $120,000.
The link for this can be seen here:
http://mycpf.cpf.gov.sg/CPF/my-cpf/reach...ch55-2.htm