Are CPF members paid low returns due to massive GIC investment losses?

The day transparency sees daylight will be the day CPF members discover the massive investment losses concealed for decades.

Although PAP has refused to come clean with the actual returns earned by GIC, some worrying estimates by reputable firms have in a way confirmed our greatest fear.

According to a Reuters article, Morgan Stanley had estimated GIC’s AUM to be US$330 in 2008. This was entirely possible as LKY had claimed GIC’s 25-year rate of return in US$ was 9.5%, ie a US$10 billion investment would have increased almost 1000% in 25 years to US$96.68 billion. Calculator

GIC had also disclosed its 20-year rate of return in US$ to be between 8.3 and 9.8%, from 2001 to 2006. A 20-year investment would have increased in value by 500% to 650%.

Since net CPF contributions and land sales revenue amounted to more than S$150 billion before 2008, together with LKY’s high return claims, GIC’s estimated AUM of US$350 billion by Morgan Stanley shouldn’t be way off the mark.

Problem is, GIC’s latest AUM has been estimated by SWFI – a very reputable institution – to be er … only US$359 billion. How could GIC’s AUM increased by only US$9 billion from 2008 to 2017? GIC’s AUM should have increased by S$228 billion at least because the government had injected CPF and land sales during this period into GIC.

According to official data, land sales revenue + CPF net contributions amounted to S$228 billion from 2008 to 2016 (table below).

If SWFI is correct, then Morgan Stanley must have employed some interns in arriving arriving at its US$350 billion estimate: it was way off the mark by about US$200 billion. This would also imply that GIC and LKY had earlier made fictitious return claims.

If Morgan Stanley had professionals monitoring GIC’s AUM, then SWFI’s estimate of US$359 billion should be closer to US$550 billion. But GIC clearly does not manage US$550 billion because this is not reflected in our Statement of Assets and Liabilities.

Something is amiss at GIC and in all likelihood, massive losses are concealed. This appears to be the reason why CPF members have been paid low long-term returns and our retirement funds perpetually trapped.

Parliament, if indeed it serves citizens’ interests, should get to the bottom of this and not allow PAP to conceal material information from the public. 😦

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