20160311 Did CPF members lose $140 billion to the government by 2006?

Tens of billions of our CPF had been used to finance infrastructure construction and GLCs, without which Singapore wouldn’t be where it is today. But the returns paid to CPF members were paltry.

An equal amount of returns from CPF investments, if not more, was also confiscated by the government, legally. How much has CPF members lost to the government by 2006?

Based on former GIC chairman, Lee Kuan Yew’s 25-year 8.2% returns in Singapore dollar since inception, we can calculate this amount. It’s not exact but should be close. And huge.

In 1981, GIC was believed to be managing less than $10 billion in foreign reserves comprising CPF, land sales revenue, etc. We will focus only on the CPF amount which GIC (PAP) has refused to disclose, for fear of inadvertently disclosing a black hole in government finances?

In order for CPF balances to hit $36 billion in 1989 (see table below), GIC was probably managing about $3 billion to $4 billion in CPF in 1981, taking into account the high 6.5% CPF interest rate till 1986.

CPF balances in 1989

Let’s just use an extremely conservative amount of $3 billion annual increase, interest excluded, from 1981 to 2006. Based on 8.2% return for 25 years, CPF balances should have amounted to $265 billion in 2006.

. CPF
1981 $3 bil
Annual addition $3 bil
25 year @ 8.2% $265

Calculator here

However, according to MAS, total CPF balances was only $125 billion. (see table below)

It appears CPF members had already lost $140 billion to the government by 2006.

Questions:

Is LKY’s figure of 8.2% return a figment of his imagination?
Did CPF members collectively lose $140 billion over 25 years?
How much had the government profited from CPF members by 2006?
How much has the government profited from CPF members to date?

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