The national call for transparency on our CPF by Singaporeans have uncovered more and more truths about what the government is really doing with our CPF.
Since late May this year, the government has finally bowed down to pressure to admit to the truth of what they are really using our CPF for.
Here, we look at 8 truths the government has finally admitted to Singaporeans.
(1) 85% of Singaporeans are Not Able to Meet the CPF Minimum Sum
First, the government had previously wanted us to believe that “49.4% were able to set aside their full Minimum Sum, either fully in cash, or partly in cash and partly via a property pledge” but it was only in parliament two days ago when the government finally admitted for the first time that this includes “15% who used their properties to support up to half of the CPF Minimum Sum“. Also, for the first time ever, they admitted that of the CPF members, “23% of Singaporeans who turned 55 in 2013 were inactive CPF members,” and of the remaining 77% who were active members, this also includes a portion who are self-employed.
The government has still refused to admit to how many Singaporeans are actually able to meet the CPF Minimum Sum fully in cash. But we are now able to finally make a more accurate estimation of Singaporeans who are able to meet the CPF Minimum Sum fully in cash.
According to Leong Sze Hian, he was able to estimate that “if we assume that about 17 per cent of the 77 per cent were self-employed – then, 60 per cent were active members”. And also, “since “half of active CPF members met the Minimum Sum in 2013, including 15 per cent who used their properties to support up to half the Minimum Sum” – does it mean that only about 30 per cent (half of 60 per cent) were able to meet the Minimum Sum including the property pledge, and only about 15 per cent (30 minus 15 per cent who pledged property) met it entirely with cash?”
If so, we are now able to finally estimate more accurately that only about 15% of Singaporeans are able to meet the CPF Minimum Sum fully in cash, which would mean the large majority of 85% of Singaporeans are not able to meet the CPF Minimum Sum fully in cash at all!
So, the government might claim that 49.4% of Singaporeans are able to meet the CPF Minimum Sum but the truth is only 15% are able to meet this Minimum Sum fully in cash and 85% of Singaporeans simply are not able to save enough in our CPF.
(2) 85% of Singaporeans are Not Able to Receive $1,200 in CPF Payouts
According the government, they claim that Singaporeans “can pledge (our) property to set aside only half the full Minimum Sum in cash”.
The government also says that, “if you do not meet your Minimum Sum at 55, you do not need to top up the shortfall in cash nor do you need to sell your property to make up the shortfall”.
However, the government also finally admits that, “What it means is that with your smaller amount, your monthly payout will be correspondingly lesser, and that is all.” That is all??
The government goes on to say that, “This means a member turning 55 this year (will only have) … $77,500 in cash,… (which) will translate to a CPF LIFE payout of about $600 per month in retirement, which is not excessive.” Not excessive?
According to the government, the CPF Minimum Sum is computed to give Singaporeans a monthly payout of $1,200, which they say is “just adequate for basic living expenses”. Then if 85% of Singaporeans aren’t even able to meet the CPF Minimum Sum in cash fully and aren’t able to receive this payout of $1,200 to afford us adequate living, doesn’t this mean 85% of Singaporeans won’t be able to depend on our CPF to retire adequately at all?
If so, does the CPF still serve its purpose for Singaporeans?
(3) 70% of Singaporeans Do Not Even Have Half of CPF Minimum Sum of $77,500
From the above, we know that about 85% of Singaporeans are not able to meet the CPF Minimum Sum fully in cash.
But how many Singaporeans are not able to even meet half of the CPF Minimum Sum fully in cash?
The government has revealed that “15% (of Singaporeans) used their properties to support up to half of the CPF Minimum Sum”. This means that of the 85% of Singaporeans who are not able to meet the CPF Minimum Sum fully in cash, 15% have used their property to pledge up to half of the Minimum Sum. The rest of the 70% hasn’t. The government also said that, “if you do not meet your Minimum Sum at 55, you do not need to top up the shortfall in cash”.
Then, does this mean that 70% of Singaporeans do not even have half of the CPF Minimum Sum, or $77,500, in our CPF?
Does this mean that 70% of Singaporeans are not even able to receive a payout of $600, or half of the promised $1,200?
If so, when it was revealed by Tharman in 2011 that the median CPF Life payout was only $260, isn’t this very true indeed, then?
(4) 50% of Singaporeans Do Not Even Have $60,000 in CPF
But what else are we able to now really know?
The government says that, “the CPF pays an additional 1% interest on the first $60,000 of combined balances.”
And it was then revealed for the first time again that, “As a result, about two-thirds of members earn 5% interest on all their balances in their Special, Medisave and Retirement Accounts. Over half of all members earn 3.5% on all their Ordinary Account savings.”
If so, does this mean that as many as 50% of Singaporeans do not even have $60,000 inside the CPF?
This does somewhat correspond to what we have found above, doesn’t it, where 70% of Singaporeans do not even have $77,500 inside our CPF?
When you look at all these as a whole, then why does the government keep championing the CPF Minimum Sum, when they know that the majority of Singaporeans simply do not have enough at all to ever meet the CPF Minimum Sum?
85% of Singaporeans are not even able to have $155,000 in our CPF. 70% are not even able to have $77,500. And 50% are not even able to have $60,000!
85% of Singaporeans won’t even get monthly payouts of $1,200. 70% won’t even get $600. 50% won’t even get $460.
Why does the government keep telling Singaporeans that if we are able to meet the CPF Minimum Sum, we would be able to receive a monthly payout of $1,200, which they say is “just adequate for basic living expenses” for a lower-middle income household, knowing the majority of Singaporeans won’t even be able to meet this basic minimum!
Why does the government continue to emphasise this lofty $1,200 goal for Singaporeans, knowing full well that as many as 70% of Singaporeans won’t even be able to reach half this amount?
Why does the government continue to champion the CPF system as adequate when the majority of Singaporeans won’t be able to retire even adequately?
(5) Singaporeans Use Half of Our CPF to Pay For Housing
The government also finally revealed that, “Among members who turned 55 years old over the past five years and had used CPF monies to purchase HDB flats, an average of 55% of their OA savings had been withdrawn to finance their flats at age 55.”
But how much exactly is this 55%? By now, we know that possible half of Singaporeans don’t even have $60,000 in our CPF and 70% of Singaporeans don’t even have $77,500.
But the problem with the logic is this – why does the government say that Singaporeans can pledge half of our property to meet the CPF Minimum Sum, knowing full well that Singaporeans have used half of our CPF to pay for our flats?
First, we have to take half of our CPF to buy our home. Then, we have to pledge our homes to be able to meet half of the CPF Minimum Sum. And if we don’t have enough in the Minimum Sum to retire with, we will have to sell our homes.
Do you see the logic here?
We have to use 50% of our CPF to buy our homes, only to pledge our homes to get back this 50%. Something is terribly wrong with this logic here.
Three days ago in parliament, Minister for National Development Khaw Boon Wah said that, “Firstly, we control the construction programmes. Secondly, we set the price (for public housing).” If so, if the government controls how much the flats cost, and the government also controls our CPF, but the government can mess up how we use our retirement funds to buy our homes, then you have to really question what the government is doing here.
(6) CPF is Invested in the GIC
Finally, it is only early last month that Singaporeans finally learn that our CPF is invested in the GIC. For the first time ever, the government finally admits to the truth of what they are really doing with our CPF.
Yet, Singaporeans have speculated about this for many years, and in fact, for the last few decades but never once did the government wanted to tell Singaporeans the truth.
Finally, in June this year, the government finally bowed down to public pressure to admit the truth.
Why did the government not want to tell us the truth all the years? Why has the government hid the truth from us all this while?
And why did the government finally admitted to the truth only in June this year?
(7) CPF is Not Invested in the Temasek Holdings (Really?)
At the same time, it is also for the first time in June this year that the Temasek claims that they do not invest our CPF.
Yet, in a book written by an ex-director from the Ministry of Finance, it was revealed that since the 1970s, our CPF was invested in the Temasek Holdings all the way until at least the 2000s.
So why did the Temasek Holdings suddenly say they don’t? When did they stop and why did they suddenly stop?
Why did the government stop channelling our CPF into the Temasek Holdings, which is earning a high 16% interest and then transferred us to being invested solely in the GIC, which earns a lower 6.5% interest, at USD terms?
And also, if the government has indeed been using our CPF to earn high interests at the Temasek Holdings for nearly 40 years now (since the Temasek Holdings was set up in 1974) and they have been earning all these money off from us without returning it, then by suddenly cutting Singaporeans off Temasek’s investments and not returning this money to us, isn’t Singaporeans losing millions, if not billions, that the Temasek Holdings have taken from us? And by not telling us that they have ever used our CPF to invest in the Temasek Holdings, isn’t the government siphoning off Singaporeans’ money? Is this legal?
(8) The Government Has Given $35 Billion to Temasek Holdings
Yesterday, Temasek Holdings also revealed that it received “a $5 billion injection of fresh funds from … the Ministry of Finance“. Also, “in 2007-2008,… the Government said it moved $10 billion of its reserves – the largest cash infusion into Temasek since its inception in 1974,” and that, “including this $10 billion, the Government had injected slightly less than $30 billion of cash and assets into the firm since its inception until 2008”. This would mean that including the $5 billion injection last year, the government would have injected $35 billion into the Temasek Holdings (or more if there were more unreported injections from 2008).
But more importantly, where does this cash injection come from?
(9) Temasek Holdings Does Not Invest Singaporeans’ CPF? (Sure or Not?)
For the very first time, we now know because the government has finally admitted to The Straits Times that, “The additional capital came from proceeds from the Singapore Government Securities (SGS), as well as government budget surpluses and the proceeds from government land sales in Singapore.”
Leong Sze Hian had also quoted The Straits Times as having reported that, “The Ministry, which is Temasek’s sole shareholder, also told The Straits Times that the capital injection did not include proceeds from the Special Singapore Government Securities (SSGS), which are instruments that the Central Provident Fund (CPF) Board uses to invest Singaporeans’ CPF savings. In other words, Temasek does not manage any CPF monies, an MOF spokesperson reiterated.”
Yet, Leong Sze Hian continues to ask, “did any of the capital injections from the past say exactly where the money came from?” And, “how do we know for sure that Temasek’s capital injections (in the past) … did not come from CPF funds?”
However, as I had exposed previously, the CPF was indeed at one time, from the 1970s, invested in the Temasek Holdings. So, even as the government claims that the current capital injection does not come from the CPF, did the past capital injections prior to June this year actually come from CPF?
Indeed, The Straits Times also reported yesterday that, “CPF monies are pooled and invested together with the rest of the Government’s funds, such as proceeds from SGS bonds (which the Temasek uses) and land sales, as well as any government surpluses. This is done through the GIC, the Government’s fund manager.”
Then, if the government has pooled the funds together before investing them, doesn’t that mean that the Temasek Holdings does indeed invest our CPF?
So, what exactly is the government trying to say, or actually, trying to do? What exactly has the government been doing back-end since June this year that has so thoroughly confused them?
We know that it is the first time in June this year that the government finally admits that the GIC uses our CPF to invest. It is also in June this year that Temasek Holdings claims for the first time that it does not invest our CPF, even though we know they had used to.
All these revelations and admissions of the truths only happened in June this year. So what has the government been trying to jiggle back-end that has gotten them confused?
If the Temasek Holdings had in fact used Singaporeans’ CPF to invest, then what exactly did they do with our CPF and why did the government suddenly say they do not now?
(10) GIC Earns 5.0% Over Past 20 Years (And 0.5% Over Past 5 Years??)
But finally, even though the government has said that “over the last 20 years, GIC earned 6.5% per annum in USD terms”, two days ago in parliament was the first time ever which the government revealed that this “translates to 5.0% per annum when expressed in SGD”.
The government has never wanted to reveal this information. It is the first time ever that the government has revealed the interest earned in SGD terms.
What’s worse is that the government then also finally revealed that, “over the 5-years following the crisis, ending 31 March 2013, GIC earned an annualised return of just 2.6% in USD terms, which translates into a mere 0.5% in SGD terms”.
Leong Sze Hian has written that, “In the same day’s Straits Times, (it was reported that) Temasek’s annualised return for the past 40 years, from its inception is 16 per cent.” He then asked what “GIC’s annualised S$ returns since inception” is, and asked why, “If Temasek can tell – why not GIC?” (The returns of 5.0% in SGD terms the government had just revealed about the GIC pertains only to the past 20 years and not the past 34 years since GIC’s inception in 1981.)
Leong Sze Hian also asked, “Since we have been told that GIC manages CPF funds, but not Temasek – shouldn’t it be even more important for GIC to disclose its returns from inception? Is this figure more than 6 per cent, since it was disclosed in 2006 that the returns for the 25 years prior to 2006, was 9.5 per cent?”
Maybe we should ask these questions:
- Why did the government delink our CPF from being invested in the Temasek Holdings, which is earning a much higher 16% interest?
- Why did the government decide to only channel our CPF into being managed solely by the GIC, which is earning a much lower interest?
- Why did the government choose to report the significantly lower 0.5% interest that the GIC is earning over the past 5 years?
- Why did the government choose not to reveal the interest that the GIC is earning since inception?
Make no mistake, the government’s revelations are a sign of things to come. And if you read the tea leaves, you will know why the government is revealing only the information that they want you to believe, and this will set the tone for the changes to come.
Since our CPF is now made to be invested only in the GIC and the GIC is only earning 0.5% over the past 5 years, then when “enhancements” are made to our CPF, you can be sure what to expect.
And when the time comes, then we have to ask the government why they do not return to Singaporeans the 9.5% they earn at the GIC in the 26 years preceeding 2006 and the 16% they are earning at the Temasek Holdings, before they cut Singaporeans off from it.
Very convenient, isn’t it? I wouldn’t hold my breath.
It was also reported in The Straits Times yesterday that the pension funds in other advanced countries have earned an average of 7.4% annually from 2009 to 2012. If the other advanced countries are able to do so, why is it that the Singapore government still chooses to give Singaporeans only as low as 2.5% on the majority of our CPF, and claims that this is a “fair” and “secure” rate, when it is evidently too low?
As I’ve illustrated in this article, there are many revelations and truths that the government is finally making over the past two months. I have listed 10 here. Suddenly, the government is trying very hard to salvage the situation over the last two months, and has admitted to the many truths that we have been asking them to no avail for the longest time. And suddenly, in a span of less than 2 months, the government has revealed so many more things about our CPF than Singaporeans were able to know in the past 2 decades.
However, the government still hasn’t answered the questions that I had posed previously – why have they hidden information from us and why are there discrepancies?
But even as they try to patch the loopholes, we finally know that the CPF Minimum Sum is a fess up. There is no way the large majority of Singaporeans will ever be able to meet the CPF Minimum Sum, at the rate our CPF is growing. And the government is making us use our CPF to pay for housing for which prices they set to sky-high limits, which is evidently eating away at our retirement funds. Then, what is the problem here? That Singaporeans are spending too much on housing, or that the interest rates given on our CPF is too low and housing prices are charged too high by the government?
And of course, it doesn’t help that the government decides to channel Singaporeans’ CPF only into the GIC and decides to announce a low 0.5% that the GIC is earning.
Things are quite clear at this point, don’t you think?
Something is brewing.
#ReturnOurCPF Event on 12 June 4pm at Hong Lim Park to Demand Transparency and Accountability on Singaporeans’ CPF
At this point, we have a choice. Do we want to sit still and wait for the government to change, or to we want to sit up, stand up and use our voice to demand for change from the government? It took them more than 2 decades to finally give us the answers that we want, after things exploded in their faces. Finally, we are hearing the government admit to the truths over the past 2 months, but even then, these are half-truths, as the government still doesn’t want to give full information on what is actually going on.
We took more than 20 years to finally push the government to be honest to Singaporeans, and the government chooses to give only half-baked answers. I don’t know, do you think the government is taking Singaporeans seriously?
This Saturday, an event, #ReturnOurCPF, will be held to demand to the government to be transparent to Singaporeans about what they are really doing with our CPF and be honest to Singaporeans. Today, if 85% of Singaporeans are even unable to meet the CPF Minimum Sum and are unable to retire, then something is really wrong with the CPF and how the government is managing the CPF.
We need to demand the government to be truly transparent and accountable to Singaporeans, so that Singaporeans are able to get our lives back.
This Saturday, come down to the event. We will see you there. It is time we stand up to fight for our own rights and our own freedoms. It is time we make change happen, for ourselves, for our children and their children. It is time.
You can join the Facebook event page here.