The CPF issue concerns every Singaporean. Every citizen has to be concerned about the opacity and it is also our responsibility to demand transparency from the government. The issue of transparency must be resolved once and for all.
1 We have a ridiculous situation where it is acceptable for GIC’s opening and closing balances to be unknown. Every member is expected to speculate on how GIC makes its profits. It is actually incredible for any government, in this case Singapore Inc, to engage in such a bad accounting practice by demanding its CPF ‘shareholders’ to accept returns (2.5% to 4%), no questions asked. In any listed company, there would have been a shareholder revolt and the board of directors would be replaced.
2 The simplest way of improving transparency is to have CPF funds invested directly in GIC. But the PAP insists on ‘investing’ them in Special Singapore Government Securities (SSGS) which are then used by the GIC for investments. The PAP then claims that there is no way to know the exact returns. (something not quite right here) There is obviously a paper trail ie when GIC receives funds, so the exact investment and its returns can be verified. Despite this, CPF members are forced to accept paltry returns of 2.5% to 4%. The MOF says that by disclosing the amount of our CPF savings in GIC, which is part of its assets, it would “open Singapore to speculative attacks on its currency”. This explanation is plain ridiculous. Since when did CPF members allow the government to use our savings to defend the Singapore dollar?
3 Does GIC invest CPF monies? A simple question on GIC’s website requires a 171-word answer? Why are CPF members being confused?
4 GIC claims to have a proven track record in investment. So why are CPF funds not invested directly in GIC to benefit CPF members?
5 The PAP also claims the SSGS is guaranteed by the Singapore government. Revenue of the Singapore government comes from taxpayers/CPF members. In other words, tax payers/CPF members are effectively guaranteeing ourselves. The Singapore government is not a separate entity as the PAP makes it out to be. (read Christopher Balding’s “Between apathy and risk” and other articles on CPF, GIC and Temasek Holdings written by him)
6 In the unexpected event of huge CPF losses, say the CPF balance is only $159 billion instead of $259 billion, our government’s guarantee will mean nothing more than printing money to pay CPF members. This will result in a loss of confidence with foreign investors fleeing Singapore and our exchange rate will also collapse. Will Singapore be the next Greece? Without transparency, nobody can say for certain but there is always a possibility.
7 The Monetary Authority of Singapore is the central bank of Singapore (MAS). CPF retirement savings should have no place in the MAS. Temasek has stated it does not invest or manage the savings of CPF members. The conclusion is GIC manages all CPF monies. GIC refuses to be transparent by claiming it is unable to disclose its assets (mostly CPF funds?) but, in fact, the amount of its assets has all the while been made known to the world. GIC has lost the trust of citizens.
It appears the government has taken great pains to obfuscate the performance of our CPF investments for reasons known to only a handful of politicians. Government assistance scheme and the CPF MS scheme which disallows members from withdrawing after retirement age continue to suck billions of dollars into the CPF system for GIC’s benefit. This should have raised a red flag.
CPF members are right to be concerned about their savings and deserve nothing less than total transparency from the government.