I read Alex's letter on EPF with interest but his analysis does not cover the effect of inflation.

As a consumer, it is important that my income or investment return is higher than price inflation to protect my wealth from being deteriorated by inflation.

I therefore investigated the relationship between consumer price inflation (CPI) and dividend or return on investment (ROI) from EPF.

My calculations reveal that a pensioner's EPF dividend, after taking into account the CPI, has been falling since 1999 (apart from 2002) - see Table 1. This is worrying because it means that the pensioner's standard of living that is supportable by EPF dividends has been reducing since 1999.

However, the ROI of 2003, after considering inflation, has increased from 1999 through to 2002 (see Table 2). This may indicate that the investment choices of EPF have not worsened since 1999.

However, as indicated by Alex, there is perhaps room for improvement regarding EPF's investment decisions.