PAP must disclose GIC’s real performance, multi-billion dollar losses will affect CPF members

For close to 3 decades, PAP has been paying CPF members extremely low long-term rates.

Coupled with mandating a portion of CPF into the MA and SA, this has resulted in a huge retirement shortfall.

Most Singaporeans have suspected the reason to be mounting losses at CPF fund manager GIC. In order to prevent GIC from collapsing, it is widely believed that PAP channeled additional funds into GIC by tweaking legislations, postponing CPF withdrawal and paying minimal returns.

The increasing multi-billion dollar deals by CPF fund manager GIC is a cause for concern. All these investments have no plan B. It appears GIC has been taking higher risk in an attempt to offset hidden losses.

According to the Sovereign Wealth Fund Institute (SWFI), GIC’s AUM had increase by only US$6 billion from June 2015 to June 2016. This means there could have been huge realized losses or unrealised ones after the value of investments had been marked to market. Within the same period, GIC had received about US$13 billion in CPF, excluding interest.

According to an earlier SWC report in 2013, GIC’s AUM increased from US$230 billion in 2007 to US$279 billion in 2012, an increase of US$49 billion.

However, CPF balances had also increased S$94 billion/US$70 billion from S$136 billion to S$230 billion over the same period. MAS report

After taking into account the S$33 billion interest credited into CPF members’ account, GIC did not make any loss. However, GIC’s annual return was probably ZERO from 2007 to 2012.

This is  likely because of huge losses incurred during the GFC.

Sovereign Wealth Centre and Sovereign Wealth Fund Institute are reputable organisations. If not, they would not have been frequently quoted in foreign as well as local media.

Reports by SWC and SWFI paint an unflattering picture of GIC. If their data are inaccurate, GIC should correct them. Left uncorrected, more CPF members will lose trust in GIC’s management of our retirement savings. 😦

Better still, PAP should disclose GIC’s real performance to CPF members and not hide behind self enacted legislations in an attempt to conceal material information.

GIC’s performance ultimately affects CPF members and we want to know the truth. 🙂

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