20150630 CPF – the $282 billion question that PAP cannot answer

The CPF scheme has failed Singaporeans and the abuse of our national pension system looks set to worsen.

Thanks to Roy, an increasing number of CPF members have become acutely aware that we have been shortchanged by the PAP government. The CPF issue has become too hot a political potato for PAP that the “ReturnOurCPF” protest at Hong Lim Park had to be shut down.

Hong Lim Park protest – citizens forced to beg for the return of our CPF.
Image source: Yahoo

Due to the pressure from (mostly) Roy and opposition party members like Kenneth J, Chee Soon Juan, etc, PAP has reluctantly agreed to a partial return of 20% when CPF members reach 65. But how is returning only 20% from the 100% taken away supposed to appease CPF members? What about increasing the withdrawal age from 55 to 65 and paying the balance 80% in a till-you-are-in-a-coffin installment plan?

As PAP attempts to avoid paying back every single cent of CPF to their rightful owners, more Singaporeans will suspect and speculate on the government’s ability to pay, ie there are huge CPF investment losses.

PAP must come clean and address the issue of transparency or it will arouse even more suspicions.

Any pension scheme with employees contributing 36% (at one stage up to 50%) of wages for 35 years but unable to retire comfortably must fit the definition of failure, ie our CPF.

The PAP should not micromanage our needs unless it is willing to state very clearly that CPF will be insufficient and members would need to fund our retirement by selling our homes.

Through frequent tweaks by an unchecked Paliament, our CPF has continued to be abused right under our noses and excess returns earned from CPF invested by GIC are still being retained by PAP.

Most of us are only aware that CPF interest rates are presently way below our real inflation rate. But CPF rates had fallen below the official inflation rate in the past, such as, from 1972 to 1981. Sub inflation CPF rate is one of the causes of our CPF retirement shortfall.

From 1972 to 1981, the CPF interest rate was below the CPI.

In 1982, Minister Toh Chin Chye confirmed that our CPF was used for “the construction of new factories, installation of new plant and equipment, expansion of infrastructure such as roads, ports and telecommunications, the building of houses and so on.” The use of our CPF was instrumental in creating the Singapore ‘success’ story.

Since 1970, our GDP per capita has increased by more than 5000%. But why are total CPF interest rates are not even 5%? Relative to our economic growth, CPF was really a VERY CHEAP SOURCE OF FUND.

When CPF members are paid between 2.5% and 6.5% to generate phenomenal economic growth, how can this not be termed ‘abuse’?

An easier to understand example of how CPF was abused would be Singtel. By 1990, Singapore had its one millionth phone line and became one of the first countries in the world to have a completely digital telephone network. Billions of CPF were used to fund the construction of Singtel’s network but the beneficiaries of Singtel’s returns are Temasek and Singtel shareholders.

PAP has no intention of distributing Singtel’s, and other GLCs’, returns to CPF members. Although Temasek has since reduced its shareholding to 52%, all the billions in divestment proceeds have been reinvested, excluding an average of more than $1 billion in dividends since its listing.

From 2007 to 2014, GIC received $136 billion of CPF. It had taken 52 man years for CPF members’ balance to hit this amount but 7 years to double it. Why would GIC urgently need $136 billion for investment when all asset prices are inflated?

GIC certainly could not have been able to return all CPF members’ monies at 55. In fact, it can’t even return us at 65 and that’s the reason for the derisory 20% lump sum. Only the ignorant will buy into the PAP’s Chee-Koh-Pek-will-spend-all-his-money-at-Batam propaganda. Read about this busted CPF myth here.

There are Singaporeans who think the world of PAP and to them, huge CPF losses are impossible. Think again.

When PAP town councils sold their computer software, developed with millions of public funds, to a PAP company in 2011 for peanuts, most had thought this impossible.

In our law-abiding abiding country, overturning police cars and setting them on fire could not have happened. Impossible! PAP MP Intan who blindly supported a Chinese cheat’s PR application while the MOM and ICA were slumbering was also an impossibility.

Every DBSS project, HDB’s so-called premium public flats, has ‘too many’ complaints that a task force to look into them was set up by Minister Heng. This has never happened in the past. And one would have thought an MOE minister assisting the MND was impossible too.

‘Impossible to happen’ in Singapore seems to be happening more regularly. So ‘impossible’ for huge amounts of CPF investments to be wiped out is really not impossible after all.

PAP has been trying to convince Singaporeans that all is well with our CPF but citizens demand nothing less than total transparency. PAP seems to have mistaken public monies as its own funds.

Increasing token CPF interest rate may appease some and maintain whatever little confidence in the system but for how long? How long will PAP continue to prevent the disclosure of information which belongs in the public domain? Will PAP be forced to do so after the next financial or when it loses its parliamentary majority? Will losses be manageable by then?

It’s only after scrutiny of GIC’s investments that I have realised the media-created image of GIC is totally different from reality. GIC has not been managing but sitting on many underwater investments and in some cases, threw good money after bad. Opacity is not a hallmark of a good fund manager.

PAP is the servant of the people and it can’t simply disengage us at its whim. CPF protests at Hong Lim Park would not have taken place if PAP had addressed our unhappiness. Despite having written tonnes on the CPF, PAP did not engage Roy; instead, PM Lee took offence and opportunity at a blogpost to take legal action which will lead to Roy’s bankruptcy.

The government should be concerned about the trust of government bodies being eroded by its complete silence. But PM Lee seems more concerned about his ‘reputation’.

It seems CEOs of statutory boards such as CPF Board are paid to act dumb, requiring their paramount leader to resort to legal means to silence criticisms.

Concerned citizens, including me, are not ‘too free’ to spend hours researching and posting articles for the sake of sliming PAP. Many are not even members of any political party and stand to gain nothing from months of effort. As expected, there are factual errors (honest mistakes) but why have they not been pointed out? If members of the public are not reading the ‘right’ things, isn’t it the government’s responsibility to engage us by providing factual figures? Or perhaps the government agrees to most of what has been written.

The total balance of our CPF is not $282 million but $282 BILLION. GIC should not be allowed to continue managing our CPF without providing a proper set of accounts as it would be logical to suspect something’s not right.

Too many CPF questions abound but after having concealed information for decades, it’s unlikely PAP will be providing an answer to the $282 billion question.

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8 Responses to 20150630 CPF – the $282 billion question that PAP cannot answer

  1. Mave says:

    What’s there to answer? When you buy a house, HDB, condo, or landed property, it has always been there for withdrawal and used to purchase your property. The seller, which you may have been once, took the money (others CPF $$) and some go buy another property, some buy cars and some pay ah long. When you need to pay for university or poly tuition fee and your family is not that cash rich, didnt you manage to finish your studies using the CPF?

    When u fell ill or get into accident, your medisave is there to pay the bills. Even when you are healthy, it was used to pay your medishield premium. Or if you ever remembered your grandparents in ICU during the last few months of their life, the medical cost was so high that all family members help to pay using their medisave. Did anyone every thanks CPF that you still have money left for the funeral?

    When you are in your 20’s or 30’s working hard and trying to build a career, there comes along your partner. Both of you work so hard trying to start a family and buy a house or fulfil some dreams. Aren’t you glad because of the minimum sum or CPF life that your parents are receiving monthly payout which directly help to reduce and lessen your burden. So that You have that little bit of cash more to spend on restaurant, cafe or movies date just because your parents are less reliance.

    All human will reach that eventual path. For those who experienced a family member passed on did you remember receiving the big fat cheque from the closure of their CPF account? How did you spent it or save it? Did you even remembered? Did it help the families at all?

    I could not comprehend those who keep questioning about the CPF system. There’s no question that the money is yours or your family ones if you passed on. Try giving up your citizenship or just passed on to see if the money do go back to you or family with astonishing interest! What did the CPF board gets in return? Nothing except noises from the disgruntled, unappreciative citizen.

  2. phillip ang says:

    I will try to enlighten you a bit. Firstly, if CPF is really your money, there shouldn’t be frequent tweaks to the system. This means you are not in control of how and when you spend it.
    CPF is for retirement and the amount used for housing is disproportionate to retirement. This is one of the causes of retirement. You have mistakenly thought PAP is helping us through the use of CPF for property. But if 23% of wages did not go into CPF, we will have the cash. With cash in hand, we can purchase our own property. No need to be helped by CPF.
    Can you not see the amount we have has always been the same – it’s either in CPF controlled by the PAP or cash, controlled by us. .
    Look at every other country where retirement funds are not used for housing and you will better understand. Guess what happens when huge amount of retirement funds like our CPF goes into housing.
    When PAP mandates 23% from CPF for housing, it helps create a housing bubble. Future generations suffer. You are likely to have bought a property some time back but ask yourself who buys from you at a high price. Do you want future generations to suffer in order that you gain?
    If less than 37% of wages did not even go into CPF, we can use it for our studies, medical needs, etc. We will have cash.
    Contributing a huge percentage of our wages into CPF allows PAP full control. It appears they are helping you by allowing you to use YOUR own money for a number of things. But if the money is not in your CPF but in cash, you would be helping yourself!
    From your comment, you seem to be someone who cannot manage your funds and would prefer an external source to control them.
    Talking about receiving the big fat cheque as a beneficiary, I would rather my relative be able to enjoy his/her CPF while alive, not dead.
    You could not comprehend why CPF members are questioning the system because you have not read up on this. Read more with an open mind and you will better understand.
    Imagine you place a 2 year deposit in a bank but halfway through, it says you can only withdraw half of it and the balance it will pay you in instalments. But this is YOUR money.
    Similarly, it’s the same with CPF – YOUR money but the PAP keeps changing the rules and you do not mind??
    Perhaps you don’t need it but others do. I don’t think you will mind even if PAP delays the withdrawal age to 80.
    But spare a thought for many others who need their CPF.
    I would like to interest you in what’s been going on with our investments in GIC. There are many interesting posts under “CPF”. Perhaps you may have a better idea of why the government has been tweaking the rules so often.
    The mainstream media only tell you all the positives so don’t read too much into it.
    CPF is YOUR money and when someone has control over them, telling when or how you can use YOUR money, it is no longer really yours.
    CPF members should collectively decide, not PAP, WP or any political party.

  3. Daniel says:

    I can’t be bothered to read past the first 2 paragraphs. You are advocating letting everybody withdrawing the full amount in their CPFs, presumably once they turned 55, or abolishing the CPF system altogether? Are you going to offer taking care of these old people (for 10, 20 or 30 years) once they spent all their money? Or do you want the next generations to do that? You brought up Japan in your graphics. Do you know how much bloody tax the working young have to pay now to support the elderly who have depleted their savings. Look at the UK as well, go to uk.gov and track the amount of national debt the country is in. They spend more than 50% of their government expenditure in welfare. So who’s paying and going to pay for it? The generations to come of course. I stayed in both these countries for prolonged period. “That is the system we should have exactly”, most replied when I explained the CPF system to my friends there. What transparency are you talking about? Letting ordinary folks know what is invested? Financial organisations don’t do that for obvious reason. Your advocated transparency will caused all of us to lose money in our CPF. Transparency in return for losing money? I rather enjoy the 2.5% and 4% interest without having to question what and how is invested. Are you willing to trade the guarantee interest in return for your so called transparency, and accept whatever loss it will make? Finally, you want your money back? Just leave. You will not be missed.

    • phillip ang says:

      Would suggest you read up a little more (please don’t take this as insult). There is no such a thing as a guarantee because the government is not an external entity. Have you ever ask yourself what would happen should a guarantee be invoked? Are you not a taxpayer?
      On transparency, you should not insult ordinary folks as many may be better informed. Transparency will not lead to GIC losing money but will in fact improve the system. Without transparency, nobody knows where the screw ups are and those who made them have never been held accountable. With deadweights in the system for decades, how can GIC be a superior fund manager?
      Perhaps you are ignorant of the fact that Norway’s pension fund, GPFG, has consistently revealed ALL its investments totalling S$1.2 TRILLION. Are Singaporean ordinary folks more stupid than Norwegian’s? And it has been making money.
      It has 9,134 equity investments, 4,256 fixed-income investments and real estate investments worth 141 billion kroner.
      GIC doesn’t even have 1000 equity investments but it has not been able to disclose even one? You can read up more @ http://www.nbim.no/en/the-fund/holdings/
      Transparency and losing money is not linked.
      Why do people need to conceal general information? I hope you are able to answer this question yourself and not parrot what you have been fed by the mainstream media.
      Thanks for taking time to comment. 🙂

      • Anonymouse says:

        “On transparency, you should not insult ordinary folks as many may be better informed. Transparency will not lead to GIC losing money but will in fact improve the system. Without transparency, nobody knows where the screw ups are and those who made them have never been held accountable.”

        It’s astounding there anyone in the 21st century in the right mind and without malicious agenda who thinks transparency of their own money held (against their will) by a (not-so-honest) government is a bad idea.

  4. Gay says:

    Does your bank ask you to pay them back the interest lost if you would have left the money in the account in the first place instead of using it to buy a home.

    Every time when someone sells his house , he or she has to return the CPF $ used.

    It’s fine if you say that if I used 10K I return 10k. But that is not the case. One has to return the 10K with the interest .

    When do I have to pay interest on using my own $. If it’s really truly my $ to begin with.

    • phillip ang says:

      Lots of rules implemented by the government do not make any sense. They have only one objective – to perpetually increase total CPF balance because it is a very cheap source of investment funds.

  5. Pingback: Lee Kuan Yew on CPF | Singapore Politics: Blog

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