20141028 PAP government should take a leaf out of EPF’s book since it cannot resolve retirement shortfall issue

In my previous post, I highlighted the huge difference between the returns of EPF and CPF (5.91% vs 3.56% compounded interest) during the last 20 years. Not only were EPF returns higher every year during the last 20 years, CPF rates have never been higher than EPF rates since 1955.

CPF historical rates, EPF historical dividend rates

Something is seriously wrong with our CPF pension system when a neighbouring country has been able to achieve satisfactory returns for their citizens’ retirement for more than 5 decades. If it had not, rest assured there would be regular mass protests by tens of thousands of Malaysians, not at a designated park, but in the capital.

CPF protests at Hong Lim Park are due to the PAP government’s use of legislation to keep a huge portion of our CPF returns in GIC and to supplement the budget.

The PAP has refused to address its own shortcomings but prefers to ‘fix’ those activists who have the support of most CPF members. It has again resorted to bullying tactics using taxpayer-funded civil servants to achieve its political objective. This has continued to erode the trust of Singaporeans.

Further comparisons with Malaysia’s EPF will confirm the incompetence of our government in looking after the retirement needs of citizens.

RETURNS % 6.35% N A 3.50%

Exchange rate – S$1 = RM$ 2.55
For CPF $9.14 billion payout see MAS Annual Report page 111

The PAP government has been telling Singaporeans that our CPF cannot be invested as a standalone fund and that we need the support of government reserves in order to achieve guaranteed VERY LOW returns.

But Malaysia’s EPF:
– is a standalone fund and not commingled with government reserves to confuse its members,
– has achieved satisfactory returns for its members for more than half a century,
– has never provided returns that are lower than CPF rates since 1955,
– does not need the government to guarantee its returns at the expense of taxpayers.

If the PAP wants to regain citizens’ trust, it must cease assuming CPF members are dumb and be upfront and transparent when dealing with us.

From the (above) table, CPF has clearly underperformed by miles ie it manages $23 billion more than EPF but paid out to CPF members $3 billion less than EPF. Is this considered a stellar performance?

Since GIC’s inception, CPF rates have been a disgrace to the PAP government when compared with EPF’s.

If the PAP had modelled our CPF on the EPF, Singaporeans would have received much higher returns for our retirement.

EPF’s compounded interest rate since 1981 is 7.02% vs CPF’s 5%. The 2% is significant over the long term ie $10,000 invested in EPF would have earned $77,782 in 2013 whereas CPF only $37,653 **

CPF fund manager, GIC, has never met its objective of achieving good long term returns for CPF members.

GIC can make any claims about its performance but CPF members are really not interested in its delusions of grandeur. No point telling CPF members its annualised real rate of return is 4.1% for the last 20 years when it has been paying members average annual returns of 3.56%.

The PAP government has been failing CPF members decade after decade. Malaysia’s national pension fund model works wonders and there are also no protest rallies. The PAP government could certainly take a leaf out of EPF’s book to resolve the issue of retirement shortfall.


How much longer does the PAP government intend to shortchange CPF members with such low returns?

YEAR EPF % $ CPF % $
1981 8 10800 6.5 10650
1982 8 11664 6.5 11342
1983 8.5 12655 6.5 12079
1984 8.5 13731 6.5 12864
1985 8.5 14898 6.5 13700
1986 8.5 16164 6 14522
1987 8.5 17538 4 15103
1988 8 18941 3.1 15571
1989 8 20457 3.3 16085
1990 8 22093 3.8 16696
1991 8 23861 4.7 17481
1992 8 25770 4.6 18285
1993 8 27831 2.6 18760
1994 8 30058 2.5 19229
1995 7.5 32312 3.7 19941
1996 7.7 34800 4 20738
1997 6.7 37132 4 21567
1998 6.7 39620 4.5 22538
1999 6.84 42330 4.5 23552
2000 6 44869 3 24258
2001 5 47113 3 31536
2002 4.25 49115 3.5 32640
2003 4.5 51325 3.5 33782
2004 4.75 53763 3.5 34965
2005 5 56452 3.5 36188
2006 5.15 59359 3.5 37455
2007 5.8 62802 3.5 38766
2008 4.5 65628 3.5 40123
2009 5.65 69336 3.5 41527
2010 5.8 73357 3.5 42980
2011 6 77759 3.5 44485
2012 6.15 82541 3.5 46042
2013 6.35 87782 3.5 47653
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7 Responses to 20141028 PAP government should take a leaf out of EPF’s book since it cannot resolve retirement shortfall issue

  1. lai says:

    Hi Philip Ang, I believe you are Singaporean? before you take EPF to compare with CPF, please do further research instead of pure data that ‘created/posted’ by Malaysia government. Do you know how many of us(Malaysian) are praying to get a system like CPF? Our EPF has never ‘transparent’, many elders not able to get EPF out even they fulfill the requirement, Malaysia government just claim that they need sometime to get the money out(after months and years), can you believe this kind of reason?
    Most of our EPF is taken out by government without giving any reasons, and most of us can’t even get them out before our retirement. All we can have is only the numbers on the sheet.
    Please be fair when provide certain data and don’t mis-lead others to believe that EPF is better.
    Thank you very much.

    • phillip ang says:

      You have not been following the CPF issue. There is zero transparency and what could be worse than that? Why would you be even praying to get a system like CPF?
      If what you stated is factual, there are at least avenues for Malaysians to demand your government to provide the right numbers ie protest against the government at K L for the right numbers, preventing millions/billions in withdrawal, etc.
      “most of us can’t even get them out before our retirement” – what is the factual number for “most of us” and why should you be allowed to withdraw before retirement since EPF is designed solely for retirement?

  2. JH says:

    EPF’s compounded interest rate since 1981 is 7.02% vs CPF’s 5%. The 2% is significant over the long term…
    it’s not 2% more, but 2 Percentage Points more. this works out to a little under 30% more.

  3. Confused says:

    We should be looking at it this way, your 10k in cpf starting in 1981 earning the cpf rates would grow your money to 4.7 times for you in 2013. However, if cpf is able to generate the return of epf over the same period of time, your 10k will become 8.7 times. It is 85% more retirement fund.

    • phillip ang says:

      I think every way we look at the issue, CPF members have been shortchanged big time because CPF wasn’t really invested but used to finance infrastructure. Because not all the CPF was invested, the PAP could not earn good returns and came up with an arbitrary low CPF rate partly pegged to banks’ savings rate and other nonsensical justifications.

  4. Confused says:

    I have known of a friend who has an epf balance of less than 200 in 1980. This amount has rocketed to 1800 in 2014. It’s about 9 times.

  5. phillip ang says:

    Appreciate the info. 🙂
    That would mean my calculation is pretty accurate – $10,000 increased to almost $90,000.

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