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.
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.