20140720 GIC doesn’t manage all CPF monies, cannot provide higher returns

CPF members have suggested our monies could be invested directly in GIC for higher returns. This is not possible because it will reveal GIC does not manage all CPF monies. Billions are used as cheap loans to HDB to finance its “concessionary loans”.

Last year, the MND Minister of State Desmond Lee confirmed in Parliament “335,000 households” had an outstanding HDB loan. This translates into $38.4 billion under HDB’s “mortgage financing loan” as at 31 March 2013. The government (MAS) loan to HDB is fixed at a rate of 2.5%. The mortgage installments collected from HDB buyers at 2.6% are returned to the government. The HDB does not take any risk.

This can be seen clearer from an accounting standpoint (assuming only 2 CPF members):

Member A (- $100,000) with positive balance of $100,000 converted into SSGS transferred to MAS
MAS (+ $100,000) receives $100,000 from A

MAS (- $100,000) transfers $100,000 to HDB to fund concessionary loan
HDB (+ $100,000) receives $100,000 from MAS to disburse to B

HDB (- $100,000) gives B concessionary loan
Member B (+ $100,000) requires $100,000 and receives loan from HDB

The accounting transactions are:

The amount required for HDB concessionary loan:
– has been transferred from MAS to HDB.
– GIC does not receive the amount required to fund HDB concessionary loans
– GIC therefore does not have this amount for investment.

The ‘HDB’ concessionary loan in fact comes from other CPF members, a fact which the PAP has obfuscated to gain political mileage. All the PAP did was facilitate the transaction at another CPF member’s huge expense.

Conclusion

It is confirmed $38.4 billion CPF receive a derisory 2.5% return.

Although GIC has finally admitted it manages CPF monies, it does not managed all our CPF.

GIC manages less CPF money than thought. This is one reason why it cannot provide higher CPF returns.

Advertisements
This entry was posted in CPF. Bookmark the permalink.

One Response to 20140720 GIC doesn’t manage all CPF monies, cannot provide higher returns

  1. Pingback: Daily SG: 21 Jul 2014 | The Singapore Daily

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s