Individual risk tolerance level.
However, CPF is like a mass population thing and they can't possibly say, "Ok! Those who opt in variable returns shall have variable returns. Those with lower risk tolerance threshold will remain 4% fixed regardless."
In good times, those with lower risk tolerance threshold will look upon those having variable returns and say, "Hey! Not fair! We want it too! We contribute to CPF too!"
In bad times, those with higher risk threshold will look upon those having fixed returns and say, "I contribute to CPF too! Why can't it protect me?"
Greed at work? Sounds too familiar huh? The pretty standard boring whines which anyone can know with a twitch of their eyebrows....
I see plus & minus for it. But even though it may be variable, I personally feel that there shld be a bottom 'cap' of sorts. Maybe fix the bottom cap like standard 4% (cover for inflation at the minimum level) to ensure CPF contributors are sufficiently protected in relatively bad times when interest rates are lowered to prevent a 1% or 0.25% interest rate incident from happening.