CPF members ripped off by ‘Con People Fund’ decades ago

The CPF scheme has been abused by PAP for decades.

A few years before CPF was used to fund public housing, long-term CPF rates were higher than 12-month deposit rates (image below). As they should be.
But after the Public Housing Scheme  was introduced in 1968, PAP began to depress long-term CPF rates.

From 1968 to 1981, 12-month FD rate was higher than CPF rate in 9 out of 14 years.  This of course didn’t make sense but since PAP had full of control Parliament, CPF members were at PAP’s mercy.

PAP had a very good reason to depress CPF rate: CPF became a cheap source of funds to construct our public housing ‘miracle’.  At the same time, PAP also borrowed our retirement savings cheaply to fund infrastructure construction as well as expanding GLCs like Keppel Corp, Surbana Jurong, etc.

With low rates of return, CPF members were clearly ripped off as this had subsequently affected their retirement.

No wonder many members have dubbed CPF ‘Con People Fund’.



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4 Responses to CPF members ripped off by ‘Con People Fund’ decades ago

  1. marcus says:

    I think this is unfair – higher interest rates are associated with higher risk. In many respects interest rates are a gauge of safety: lower = safer, and vice versa.

    Nobody thinks a dollar deposited in a CPF fund is at risk, whatever the interest rate. The same cannot be said for any manner of ‘get rich quick’ high interest products available in the wider private market.

    People fully vested in CPF in 2000, 2008 (or earlier) were totally protected from the global shocks that decimated the savings of investors in open market products. None of them regretted the fact that they were not exposed to a full-scale global market crash.

    • Phillip Ang says:

      In this particular case, you are wrong. Low rates were artificial as they were depressed by the government; nothing to do with safety.
      When banks were offering on average 10% 12-month FD rate in 1980 and 1981, inflationary pressure must have been very high. How did paying CPF members 6.5% help prepare for retirement?
      Low rates were not determined by market forces but through PAP enacted legislations.
      Given a choice, who would want to be guaranteed low rates which are clearly inadequate for retirement needs?
      If GIC were a superior fund manager, it would have survived the 2000, 2008 or any crisis without the PAP providing the low rate guarantee.
      Malaysians have never been provided any guarantee but yet EPF delivered a yearly average return of 6% over the past 2 decades. Shameful performance by our fund manager, no?
      I posted Part (2) on 24 Jan.
      Thanks for your comments. 🙂

  2. AK47 says:

    I am a Malaysian. In the early 1980s, I applied to the CPF to reclaim my contributions as I was leaving Singapore. This took a month for the repayment. Instructions were given to me to collect my cheque on a Saturday morning in Robinson Road CPF office. I arrived at 9 a.m. sharp and waited. There was no cheque. The reason given was that the Manager was in conference.
    I was agitated. The cheque appeared at 11 a.m. or slightly later. Fortunately, my bank the OUB was across the road. This sort of brinkmanship puzzled me.

    • Phillip Ang says:

      I think you were much better off with EPF after returning to Malaysia as the returns have always been much higher. Malaysia doesn’t change the scheme or engage in propaganda as often as our PAP does. 😦
      Even with a lower percentage monthly contribution, your balance will be much higher than a CPF member’s after 35/40 years.

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