20141120 Retirement shortfall caused by PAP abusing CPF

The British colonial authority introduced the CPF in 1955 as a compulsory savings scheme to fund our retirement. Five decades of countless PAP tweaks have resulted in a huge retirement shortfall for members ie “nearly 75% of Singaporeans do not even have $77,500 in our CPF”.

This begs the question – why does the PAP mandate a Minimum Sum (MS) of $155,000 in the Ordinary Account plus $43,500 in the Medisave Account? Why does the PAP continue to increase the MS despite knowing only 11.5% of CPF members meet the MS of $155,000 fully in cash?

By allowing GIC to manage our CPF and paying fixed, low returns for high risk investments, there is no doubt the CPF has failed its members. CPF recently edited its ‘mission’ and ‘vision’ to mask its failure.

CPF’s mission and vision in 2002 was: (page 5 and 6)

Mission – To enable Singaporeans to save for a secure retirement.
Vision – A world-class social security organisation providing the best national savings scheme for Singaporeans to enjoy a secure retirement.

CPF’s ‘mission’ and ‘vision’ was amended in 2011:

New mission – To enable Singaporeans to have a secure retirement, through lifelong income, healthcare financing and home financing.
New vision – A world-class social security organisation enabling Singaporeans to have a secure retirement.

Points to note:

1 The PAP suka suka changed the CPF ‘mission’ and ‘vision’ involving almost a quarter trillion dollars of CPF monies as if parliament did not exist.
2 CPF new ‘mission’ and ‘vision’ are PAP’s, not CPF members’.
3 CPF had failed to achieve its mission and vision after more than 5 decades. Its mission and vision was amended to mask its failure.

Why has CPF failed? One only has to look at its history of abuse to clearly understand the issue ie tweaked to benefit businesses/government, asset enhancement and use for healthcare.

PAP has been overly focused on our CPF goldmine by tweaking contribution rates almost every year since 1968 when it first allowed CPF to be used for buying HDB flats.

Chart A (Annex A)

* From 1988 to 1991, OA rate for age below 55.
* From 1992, OA rate for age below 35.

PAP has been making wild claims such as CPF helping us in our retirement. As could be seen from Chart A, PAP was more interested in propping up property prices.


1 When the PAP first allowed CPF for public housing in 1968, there was no Medisave/Special Account. There was only ONE account meant for retirement savings and 100% was used to fund public housing from 1968 to 1976. (see chart A) CPF did not state its mission was to save for a secure retirement through public housing ownership.

2 In 1977, CPF Board suddenly realised the need to set aside some CPF for retirement and introduced the Special Account. But from the total amount of 31% CPF contribution, 30% was allowed for public housing while only 1% went to the Special Account for retirement. (Did PAP think 1% would be sufficient for retirement?)

3 In less than 20 years, total CPF contribution shot up from 13% in 1968 to 50% in 1984 and 1985. The percentage of wages channeled into the property market had increased to a mind-boggling 40%. (Did PAP already plan to advice Singaporeans to cash out on our homes 30 years ago?)

4. PAP had on intention to help CPF members save for retirement when 40% contribution was allowed to be channeled into property. The reason for the incessant increase in CPF contribution was to support HDB constructing a record 200,377 units from 1981 to 1985. (page 3)

5. Not contented with increasing public housing prices, the PAP attached a rocket booster to private property with the introduction of the Residential Properties Scheme in 1981. Our asset enhancement programme was clearly underway before Goh Chok Tong became PM. Rising property prices justified ridiculous ministerial salary hikes ie the PM’s pay increasing 79% in 1981 and further increased by another 200% in 1989.

6. Any average-intelligent citizen would have known that mandating 40% of wages into property would inadvertently create a property bubble. (Didn’t our scholar ministers and planners know?)

When the PAP increased employers’ contribution from 6.5% in 1968 to 25% from 1984 to 1986, it was not one bit concerned about rising business costs. But when it comes to belatedly increasing wages of low income earners by a few percentage points, the PAP says businesses faced with higher costs will pack up and leave. The PAP not only never bothered about planning for our retirement, it has never been interested in our well being.

Not only were CPF contribution rates changing almost every year, the PAP could not resist tweaking the CPF wage ceiling to further increase CPF contributions.

Chart B (Annex A)

1. In 1968, the wage ceiling for CPF contribution increased by almost 500% to $2307, reduced to $1,500 three years later and subsequently increased disproportionately without any yardstick at PAP’s whim.

2. From 1971 to 1985, a mere 14 years, the CPF wage ceiling was increased by 400% from $1,500 to $6,000. This coincided with the huge increase in CPF OA channeled into the property market.

3. Considering a ‘4-figure’ pay was something in those days and housing prices were 80% below today’s prices, setting the wage ceiling at $6,000 only benefitted high-income earners, including ministers and top civil servants. Can PAP explain how it helped average income earners to save for retirement by increasing the wage ceiling to benefit the wealthy?

4. In 2007, 22 years later, the wage ceiling was reduced to $4,500. This is illogical because property prices had shot up by about 400% and the value of money had been eroded by inflation. This also confirms policies have been tweaked to suit PAP’s agenda and not based on any economic factors.


Singapore’s economic ‘miracle’ can be attributed to the use, or rather abuse, or our CPF savings – channeling them into housing and financing infrastructure.

Our retirement shortfall is here to stay for good because 64% of CPF contribution (OA 23% out of 36% total CPF) is channeled into property. This has zero investment return.

It is wrong for the PAP to consider public housing, a basic need to almost all ‘owners’, as an investment. Only an immoral government would advice citizens to sell their HOMES during their golden years.

The PAP also used our CPF to finance infrastructure, without which our GDP would not have increased by more than 1600% since 3 decades ago. To arbitrarily decide to pay CPF members peanuts return eg 2.5%, is tantamount to not only abusing the CPF but betraying CPF members’ trust.

Singaporeans’ retirement shortfall is solely due to our national pension system being abused by the PAP to suit its political agenda.

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2 Responses to 20141120 Retirement shortfall caused by PAP abusing CPF

  1. Xmen says:

    I believe PAP realized their error in the inadequacy of the retirement fund and their current solution is to legislate that everyone meets the minimum sum! They previously directed CPF funds to housing and healthcare to reduce public spending in those areas. Unfortunately, many citizens simply do not have the means to pay for housing, healthcare, and retirement. Where did the money go? Hmm…. how about the Reserves?!

  2. phillip ang says:

    CPF Board should have not tried to multi task and simply concentrate on its original mission. But the PAP is all about control of citizens through various stat boards and govt organisations.
    Without channeling 40% of wages into CPF, PAP would not have the funds for construction of HDB flats and infrastructure in record numbers in the past.
    Will the HDB cede control or the current 23% CPF (of wages) for housing? Obviously not because after paying off the last mortgage instalment, members’ balance could be utilised by GIC without any transparency.
    Our reserves is one big ?

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