20140805 GIC raided reserves to pay CPF members after 2011 due to very low returns

In his reply to WP MP Gerald Giam’s and other MPs’ questions on CPF, DPM Tharman finally revealed GIC’s 5-year return in Singapore dollar was peanuts at 0.5%. It now appears our reserves had been used raided to pay CPF members 2.5% to 5% returns.

DPM Tharman’s figures (2012/2013 US$ and S$ five year return)

Table A

US $ 2.60% 8.80% 6.50% 4.0%
SING $ 0.50% ??? ??? ???

(Figures in US$ are of no relevance to CPF members besides for comparison purposes. Ultimately, returns from foreign investments have to be converted into Singapore dollar to be paid to CPF members. GIC is not being upfront on this and it is obvious returns in Singapore dollar is much lower due Singapore dollar appreciation. Publishing returns in Singapore currency will expose GIC’s weak performance.)

How were CPF members paid with GIC’s 5-year 0.5% returns?

A 0.5% compounded interest of a $100 initial capital increases to $102.53 after 5 years. Total yearly interests add up to 2.53%. (Compound Interest Calculator)

If GIC made total returns of only 2.53% for 5 years, how did GIC manage to pay CPF members between 2.5% to 5% every year?

Total CPF credited to members:

Table B (in S$ millions)

YEAR 2008 2009 2010 2011 2012 TOTAL
TOTAL CPF 5455.1 6092.6 6709.8 7472.7 8209.6 33939.8

From 2008 to 2012, CPF members were paid $33 billion by GIC.

On 4 August, Gerald Giam asked DPM Tharman the following questions in Parliament:

(a) whether the buffer of “net assets” that are used by the Government to ensure that Special Singapore Government Securities (SSGS) interest rates are paid to the CPF Board even in years when GIC’s returns are weak refers to
(i) past Government reserves requiring Presidential assent for drawdown
(ii) current Government reserves or (iii) current or past reserves accumulated by GIC or MAS; and
(b) what limitations apply to the use of these net assets.

DPM Tharman’s reply merely reiterated GIC’s framework, how funds are comingled so that GIC has the excuse not to know where they originated from, history of GIC and before it was formed, GIC’s unverifiable “good long-term returns”, past and current reserves, etc. Tharman was clearly evasive in his non reply.

Some questions in Parliament could be easily answered with a ‘yes’ or ‘no’. A multiple choice question could be easily answered. But PAP politicians love to beat around the bush every time they try to conceal information from the public.

Government raided past reserves to pay CPF members

DPM Tharman was unable to be concise in his reply because the government did raid our past reserves. The government had already indirectly confirmed this with GIC’s 5-year 0.5% return in Sing dollar.

The returns of most funds took a hit during the 2008 financial crisis but recovered subsequently in 2009 and 2010. GIC’s 5-year S$ 0.5% return can be inferred from:

– 2008/2009 – huge losses.
– 2009/2010 to 2010/2011 – regain losses
2010/2011, 2011/2012 to 2012/2013 – gains which account for most of the S$ 0.5% return.

Performance of SWFs generally mirror that of Norway’s with a steep loss in 2008 followed by a subsequent recovery.

Norway’s yearly pension fund returns from 2008 to 2012. (No reason for GIC not to publish its yearly returns)

Since there were insufficient current reserves in 2011 and 2012 (post election), GIC therefore must have drawn on past reserves to pay CPF members.

But of course the president wouldn’t know

Was the president consulted on using our reserves to pay CPF members? The answer is likely ‘no’ judging from the ignorance of our past president Mr Nathan. Just before stepping down as president, Nathan revealed that “past reserves have been used 27 times” when in fact it was “used 55 times”. Tony Tan, our current president has been silent on just about every major issue affecting Singaporeans. So he is unlikely to be aware if our reserves have been used.


DPM Tharman’s 14-point reply appears to be an attempt to obfuscate the CPF/GIC issue and conceal important information from the public.

GIC has been earning less than the amount it has paid out to CPF members after the general election. GIC should clarify how CPF members were paid if it did not draw on past reserves.

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One Response to 20140805 GIC raided reserves to pay CPF members after 2011 due to very low returns

  1. Xmen says:

    “Tony Tan, our current president has been silent on just about every major issue affecting Singaporeans. So he is unlikely to be aware if our reserves have been used.”

    Tony Tan should know everything about GIC since he ran GIC prior to his current job to oversee the reserves. You may find the following WSJ article from 2009 informative –


    It mentioned long term returns in both US and Sing dollars.

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