20150211 Time for CPF members to put a stop to PAP’s daylight robbery.

Three days ago, the Malaysian Employees Provident Fund (EPF) declared a 6.75% dividend rate for 2014. This is the highest rate since 1999.

In Singapore, the CPF Board will be using the same template “All CPF members will continue to receive at least 2.5 per cent interest on their Ordinary Account, and 4 per cent interest on their Special and MediSave Accounts from Jan 1 to Mar 31, 2015 Apr 1 to Jun 30”. This has been the same rate also since 1999.

Instead of addressing the retirement shortfall issue, the PAP appointed the CPF Advisory Panel to ‘wayang’ and further complicate the CPF scheme. Many are right to suspect heavy investment losses by GIC and therefore the need to trap more money in our CPF. But PAP’s inability to offer a higher return goes beyond that.

Suppose a miracle happens tomorrow and CPF says it doesn’t want to lose face to our neighbour and increases our rate to 7%. What will happen to the existing $40 billion plus HDB housing loans? Their rate which is pegged to CPF’s will of course be adjusted to 7.1%. (0.1% extra for the CPF to cover administration costs and a little profit, nothing is free from PAP) But rest assured there then be no more new HDB loans since bank loans are cheaper. Real estate will collapse.

Even a slightly lower figure of, say 5% CPF rate will increase HDB loan rate to 5.1%, resulting in a free fall in housing prices.

The PAP has been abusing our CPF to create high inflation (high GDP) through housing and has been addicted to such a shortcut to GDP ‘growth’ since more the 2 decades ago. The current CPF situation is likened to a grave which the PAP has dug for themselves, awaiting voters to bury them.

The PAP will continue to force CPF members to accept low rates because it does not have any choice. The PAP would of course want to increase the CPF rate to win the support of hundreds of thousands of CPF members; it simply cannot because HDB housing loans are tied to CPF rates.

For decades, PAP’s mandated CPF rates have resulted in CPF members collectively losing tens of billion$ to the PAP. Let’s just take a look at the past decade.

If a CPF member had $100,000 earning EPF rate of return since 2005, the profit generated would be $74,296. With CPF rate, he has earned only $41,059. The PAP would have effectively shortchanged the member by $33,000. Multiply this bywith at least 1 million CPF members, the PAP would have gotten $33 billion free money from CPF members over a 10 year period.

(CPF 3.5% is estimated average rate.)

2005 5 105000 3.5 103500
2006 5.15 110408 3.5 107122
2007 5.8 116811 3.5 110871
2008 4.5 122068 3.5 114751
2009 5.65 128964 3.5 118767
2010 5.8 136444 3.5 122923
2011 6 144631 3.5 127226
2012 6.15 153525 3.5 131679
2013 6.35 163275 3.5 136288
2014 6.75 174296 3.5 141059

Should CPF members not expect GIC to perform even better when our fund managers are paid million$ more than EPF’s?

Some comparisons between the EPF and our CPF scheme will convince members that something is actually not quite right.

EPF – In 2014, the EPF recorded a RM39.08 billion gross investment income.
CPF – When our CPF was used to finance infrastructure through Temasek, gross investment income was not reported. Likewise when CPF was invested by GIC.

EPF – standalone fund declaring an average dividend rate of 5.71 % for the last 10 years.
CPF – PAP says must commingle with reserves in order to achieve pay a meagre rate of 3.5% for the last 10 years.

When other standalone pension funds are able to achieve a higher rate than GIC, why does the PAP keep insisting on funds to be commingled? Who is the CPF Board serving – CPF members or the PAP?

We, CPF members, have been shortchanged by the PAP for decades with many considering this as daylight robbery. If a less developed country could be more transparent in its dealings with citizens and consistently provide better returns for 4 decades, what does that say about our CPF scheme? Is this not a disgrace?


Through PAP’s implementation of a ‘friendly loan’ arrangement for housing ie CPF members lending to one another, the PAP has abused our CPF and distorted the housing market. By mandating 60% of our CPF contribution for housing, the PAP has created the mother of all housing bubble.

Since CPF rates are tied to HDB loans, the PAP is unable to increase the CPF rate as this will simultaneously increase the HDB housing loan rate. Doing so will lead to a real estate collapse.

The housing bubble is being sustained at all costs with the CPF Advisory Panel recommending the PAP government further complicate our pension scheme.

The CPFAP has in fact not addressed the issue of retirement shortfall and plays along with the PAP’s plan to trap even more CPF members’ savings.

Because CPF members have been forced to accept a low rate of return for decades, each would have lost tens of thousands of dollars to the PAP. It’s about time we acknowledge PAP’s ‘daylight robbery’ and put a stop to it.

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2 Responses to 20150211 Time for CPF members to put a stop to PAP’s daylight robbery.

  1. Unproductive Elitists with Big Fat Salaries Disgust Me says:

    Being forced to retire with such indignity, to be denied full access to their own money upon retirement, can be considered an abuse of human rights.

    With regards to EPF, to add to the differences you highlighted in your article, upon reaching age 55, EPF members may also choose to withdraw all the money they have saved in EPF. You can find the information in the pamphlet posed on their website:

    P.S. I hope this does not start an online war about who is better. It is not about that.

    • phillip ang says:

      Just providing some reference for our greed-gone-amok government which expects CPF members to accept its nonsensical reasons for unable-to-retire returns.


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