The explosive growth of CPF balances is a clear warning sign that something is terribly amiss with our CPF scheme.
Fact: GIC’s spectacular ‘growth’ is unrelated to its investment activities but mainly due to additional annual contributions from CPF members. According to the MAS, CPF contributions (net of withdrawals) averaged $13.4 billion from 2010 to 2015.
Fact: In 2016, GIC’s AUM impressive $17 billion growth again resulted from CPF members’ additional contributions. Likewise for Q1 2017 which saw GIC’s AUM grew by an additional $5.8 billion.
There’s no denying that GIC’s AUM was growing but its real returns were peanuts: its growth was mainly due to PAP pumping additional billions in CPF into GIC.
There are many clear signs that our CPF is a Ponzi scheme.
Ponzi sign: From 2007 to 2016, CPF members’ contributions (net of withdrawal) amounted to $125 billion.
This mind-boggling growth in AUM was due to:
– PAP tweaking legislations to postpone CPF withdrawal.
– Increasing the minimum sum, ie currently, a member has to set aside a total of $218000 in the RA and MA at 55.
– Increasing the number of CPF members by increasing the foreigner population.
From 2007 to 2016, total CPF members increased by about 600,000 (table below). Since the net increase (births less deaths) in citizens averaged about 15,000 annually, more than 400000 new CPF members were either foreigners or new citizens.
CPF total balances also increased by a whopping $198 billion ($328 bil – $136 bil) over the same period. At a 10.2% rate of increase, CPF balances will cross $1 trillion in 12 years time.
$328 billion in total CPF balances is also a ridiculously-huge amount of retirement funds for a resident population of less than 4 million.
Fortunately, Ponzi schemes like our CPF can’t last much longer after being around for decades. It’s only a matter of time before the CPF Ponzi scheme blows up in our face. :(