Is CPF = Con People Fund? The answer should be obvious to those who prefer not to give the PAP a blank cheque.
Many have mistaken CPF interest rates to be high in the past which is of course not true. From 1974 to 1986, the interest rate of CPF OA was 6.5%, relatively high compared to the 2.5% we have been receiving since 17 years ago.
But seen in the context of then-prevailing long-term global interest rates, 6.5% is actually peanuts. Since long-term domestic rates move in tandem with US interest rates, the chart below confirms CPF members were fleeced big time in the past. (Singapore govt bond started trading only in 1998)
Was CPF 6.5% rate high when US 10-year bonds yielded above 10% to almost 16% for 6 years? How much did CPF members lose for allowing PAP to use our CPF to finance infrastructure construction and government-linked companies?
GIC could have been receiving as high as almost 16% in interest but CPF members were paid only 6.5%!
Obviously, all our CPF wasn’t invested in bonds.
During the same period, stock prices were depressed.
Whether invested in bonds or stocks, our CPF would have made returns way above the 6.5% paid by GIC. The highest CPF rate of 6.5% was in fact low.
PAP must stop its practice of creaming off CPF returns to supplement the budget for nonsensical reasons. Or CPF should be renamed Con People Fund.