20160920 GIC retained $61.5 billion of CPF members’ returns during last 2 decades

Over the years, PAP has become more brazen and has retained increasing BILLIONS in CPF returns to supplement the budget.

Although GIC’s long term returns are about 6%, about 2.5% is confiscated by the government annually for a non-existent CPF guarantee. As a result, tens of billion$ have been lost by CPF members. Some context:

From 1995 to 2015, CPF funds managed by GIC increased from $45 billion to $286 billion. During the same period, the 2.5% ‘guarantee’ ballooned from $1.1 billion annually to $5.7 billion. (table below)

CPF ($ bil) managed by GIC from 1995 to 2015

Year CPF (SSGS) 2.5% “guarantee” yearly 5-year period
1995 45 1.1* 6.5
2000 60 2 10
2005 100 3.4 17
2010 176 5.7 28
Total . . 61.5

* Average of 5-year balance. Figures from MAS reports.

The annual figure may not seem much. But over a 20-year period, the CPF ‘guarantee’ has cost members about $61.5 billion! (excluding interest)

PAP has been addicted to easy money and took its eyes off the economy for decades. No wonder our productivity growth has been stagnant with PM Lee finally admitting “Productivity is very tough to do”.

As the CEO of Singapore Inc, why is PM Lee stating the obvious? Is he paid $2.2 million to tell us he has a tough job? Which CEO has an easy job?

Singapore is now in trouble as confirmed by PM Lee when he said “easy ways” to economic growth have been “maxed out”.

The PAP has been totally dependent on raising foreigner headcount to increase GDP growth. This pseudo economic growth doesn’t generate sufficient revenue to cover expenditure: it is reliant on returns from our reserves (NIRC) to mask our budget shortfall.

For example, without the $14.7 billion contribution from NIRC in FY 2016, we will end up with a $11.25 billion projected budget deficit. And without the $9.9 billion contribution from NIRR in FY 2015, we would also have a deficit of $4.88 billion.

Based on CPF members’ $274 billion (average) SSGS holdings in 2015, the cost of our “CPF guarantee” amounted to $6.8 billion. The government has profited $6.8 billion without generating any economic growth.

Year CPF 2.5% “guarantee” yearly
2015 $274 bil (average) $6.8 bil

Point to note is CPF members contribute to a large portion of the NIRC every year.

The costly CPF ‘guarantee’ is an invention of the PAP, an immoral act which has already deprived CPF members of $61.5 billion during the last 2 decades. This is one reason for our retirement funding shortfall. Should CPF members continue to contribute more than $6 billion annually, and increasing, to the budget?

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