PAP really doesn’t know the returns made from CPF or just refuse to disclose material information?

CPF members are given the impression that because our reserves are commingled, PAP doesn’t know the returns made from investing CPF monies.

According to MOF (Q29)**:
– “..even after deducting all the Government’s liabilities (including CPF monies)”
– “ the remaining assets produce significant returns”

Since the government knows the “significant returns” produced by the “remaining [net] assets”, it should therefore also have the figures pertaining to the returns of CPF monies and SGS.

The image below offers a clearer explanation.

How does the government know that “the remaining [net] assets produce significant returns” if SSGS (CPF) and SGS are not held in separate accounts?

That “The NIRC of about S$8 billion is drawn from returns on assets in excess of the liabilities..” means they were not drawn from the returns produced by SSGS (CPF) and SGS. This further confirms the government has maintained different sets of accounts and knows the exact returns of each one.

Some clarification is needed. Or perhaps there’s a typo?

**

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One Response to PAP really doesn’t know the returns made from CPF or just refuse to disclose material information?

  1. sinkie says:

    The money from CPF is most likely (99.9999999999%) comingled with other national reserves and managed as a whole using a moderate-risk asset allocation model. Doesn’t make sense from asset management & investment efficiency perspective to have CPF monies kept in separate accounts. Therefore CPF monies in the national reserves are earning the same returns as the overall funds. The Billion-dollar question is what exactly are these returns over the years, and by how much PAP has been shortchanging Sinkies by giving us pathetic CPF rates of 2.5%, 4% and extra 1% here & there which only applies to excess CPF money that majority of Sinkies don’t have anyway.

    For PAP, as long as overall returns are at least 5% in the medium term, GIC/TH are able to more than enough to cover the pathetic CPF interest rates.

    Even assuming the NIRC of $8B is the maximum 50%, that means total returns = $16B. It is commonly estimated that Singapore’s total reserves are about $600B. An investment return of $16B on $600B principal is VERY low — 2.67%. Even an investment into a portfolio of boring US AA+ and AAA-rated municipal bonds will be able to provide greater returns. A conservative asset allocation would have easily given 5% returns over the last few years — that means $30B annual returns i.e. NIRC can easily be $15B, instead of just $8B.

    Hence that $8B for NIRC is probably a small portion of the total actual investment returns — most of the returns are pumped back into the reserves for re-investment.

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