20141125 Did PAP use our CPF to finance other government obligations before 2001?

The PAP government has refused to be transparent on CPF issues.

Members have been told our CPF has been invested in Special Singapore Government Securities (SSGS) issued by the Singapore government with a guaranteed low rate of return.

But according to MAS data, it appears a high percentage of our CPF was not invested in SSGS for a substantial period of time prior to 2001.

CPF members’ balance and amount invested in SSGS from 1989 to 2001 (in millions)

1989 32,120.0 36,051.6
1990 32,120.0 40,646.0
1991 32,120.0 46,049.0
1992 45,620.0 51,526.9
1993 44,620.0 52,334.3
1994 43,620.0 57,649.2
1995 45,120.0 66,035.4
1996 51,620.0 72,566.6
1997 57,120.0 79,657.4
1998 59,620.0 85,276.8
1999 62,620.0 88,396.9
2000 60,620.0 90,298.3
2001 89,410.0 92,221.2

MAS Annual Report 1997/1998 (page 129) provides data since 1989 only. Subsequent data can be found in 2004/2005 annual report (page 146).

From the above table:

1 – CPF members’ balance increased by $10 billion from 1989 to 1991 to $46 billion. However the amount invested in SSGS was unchanged at $32 billion ie 12 % to 30% of CPF was not invested in SSGS for 3 years.

2 – This narrowed to $6 billion in 1992 but suddenly widened to $21 billion in 1996 ie 29% of CPF not invested in SSGS.

3 – The amount invested in SSGS decreased from $45.6 billion in 1992 to $45.1 billion in 1995 despite members’ balance increasing by $14 billion.

4 – The difference kept increasing and by 2000, about $30 billion of our CPF was not invested in SSGS ie 33% was not managed by GIC.

5 – In 2001, the difference between CPF members’ balance and the amount invested in SSGS narrowed sharply to less than $3 billion.

Chart showing the difference in CPF balance and amount invested in SSGS

The amount of CPF invested in SSGS was consistently lower than the total members’ balance.

Strangely, since 2001, only a small percentage of all CPF members’ funds was not invested in SSGS. (see chart below)

Members’ balance and amount invested in SSGS from 2002 to 2013 (in millions)

2002 94,444.1 96,422.6
2003 100,750.4 103,539.6
2004 108,462.4 111,873.8
2005 115,362.2 119,787.5
2006 118,918.0 125,803.8
2007 128,626.5 136,586.9
2008 141,325.5 151,307.1
2009 157,446.7 166,804.0
2010 176,142.0 185,888.0
2011 197,245.5 207,545.5
2012 219,037.6 230,157.7
2013 241,428.2 252,968.6


– Why was our CPF, up to almost $30 billion in 2000, consistently not invested in SSGS prior to 2001?
– Was our CPF used to temporarily finance other government financial obligations?
– Was our CPF used to finance infrastructure until 2000?
Since part of our CPF was not invested, is this the reason for the lowest guaranteed returns?

Hopefully the CPF Board can shed some light, for once, on this issue as an increasing number of members have lost trust in the system.

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4 Responses to 20141125 Did PAP use our CPF to finance other government obligations before 2001?

  1. Chris K says:

    Phillip, suggest you look into the CPF annual reports’ investment section. They clearly showed that the difference were mostly in the line item “Advanced Deposits”, the next line item under Invesments in SSGS. This would have been deposits with the MAS. As an operating entity which faces withdrawals almost on demand such as HDB etc, CPF ought to have ready cash on deposit which can be quickly withdrawn to meet the demands and it probably had to comply with liquidity guidelines from the government, a standard requirement for pension funds around the world. Those “Advance Deposits” are every bit regarded as investments as those SSGS.

    • phillip ang says:

      Isn’t it strange to require 30% to be held in MAS? After all, CPF Board is aware of all possible withdrawals as housing is long term and the possibility of net CPF withdrawal is almost nil because of an increasing working population.
      One possibility is the withdrawal by baby boomers and perhaps after fixing this through the MS scheme, CPF funds were channeled back to GIC.

  2. wongcheokwan says:

    Very good research n analysis. How to explain to my 96 year old mother? She could only understand that she had to pay $6000 cash after $18,000 subsidy for medical bills to treat her broken thigh bone. She was a widow and brought up 7 children. But her two grand nieces from China got $70,000 for education subsidy. Is this MERITOCRASY? Merit is what you contributed; what you paid for; not how well you study.

  3. wongcheokwan says:

    People are not bothered when cpf is being transferred thru many gov depts. Why they get annoyed is that we have the highest paid finance ministers in the world but the lowest returns on our cpf pension fund. CPF has become a low yield perpetual bond.

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