To my simple mind, I just have some simple questions that I would like to ask about the CPF. We have finally exposed the government and forced them to admit to some truths about our CPF but when a layman like us try to understand what is going on, what does all these really mean?
(1) If the CPF makes up the large majority of the GIC, shouldn’t Singaporeans earn the high interest rates?
The government has finally admitted in June this year that they invest our CPF in the GIC. The government claims that the they pool our CPF together with government surpluses and land sales, to invest in the GIC. What the government is also saying is that because GIC takes on the “risk” of investment, they should get to keep the high interest rates, and Singaporeans should be given lower interest rates on our CPF.
So, my question is this – the GIC is estimated to have $400 billion in assets. CPF has $260 billion. This means that our CPF makes up 65% of the GIC assets. But take note that the GIC takes our CPF monies to invest and does not return to Singaporeans the full interest earned on the CPF, which means that if we include the interest earned on the CPF that should be returned, how much would our CPF actually be? $300 billion? $350 billion? Could it even be $400 billion or more? If that is so, this means that our CPF might actually make up as much as 100% of the GIC, or even more (which then means that the CPF monies would have to be invested somewhere else too, right – Temasek Holdings?). Would be funny for GIC to say that just because they take our CPF to earn, and the interest that they don’t want to return to Singaporeans can suddenly become their own assets right?
Then, if our CPF actually takes up a very huge portion of the GIC, doesn’t make sense for the government to say that since the GIC takes on the risk, they should earn higher interest rates and we should earn lower interest rates, right? Some more, if our CPF can be as much as the GIC (if we include the interest that was not returned), then doesn’t that mean that the funds that the GIC uses could be almost fully the CPF? If so, doesn’t that mean Singaporeans are actually taking on the risks ourselves for investment? We are giving the GIC our CPF very cheaply to earn! If the GIC makes losses, who has to deal with it? It is us, our CPF! This means we are taking on the risks!
If so, based on the government’s logic, shouldn’t Singaporeans earn the high interest rates, or the full interest earned on our CPF?
(2) If our CPF is taking on the risk for the GIC, shouldn’t Singaporeans earn high interest rates on our CPF?
I am very perplexed by what the government is trying to beat around the bush to say. If our CPF makes up the majority of the GIC, if not all, then doesn’t that mean our CPF is taking on the risk of the GIC, by giving them our CPF? Unless the government is trying to tell me that the 65% of the GIC are invested in low-risk investments, and the rest in medium to high risk, so that CPF should only earn low interest rates?
But it doesn’t work that way, right? If the GIC earns high interest rates as a whole, doesn’t make sense to give the CPF low interest rates and the other assets higher interest rates? Isn’t this very unfair? Thought the government said that we are given “fair” interests on our CPF?
(3) If the CPF is the GIC’s majority asset, why is it given low interest returns?
Which is why I am perplexed. The government finally admits the truth that GIC earns 5.0% for the past 5 years, but why does the majority of our CPF only earns 2.5%? What happened to the other 2.5%?
If our CPF takes up 65% of the GIC’s assets, and possibly a lot more if including the interest not returned, then does it make sense for the GIC to earn 5%, give our CPF only 2.5% and then give the other assets even higher interest rates?
Doesn’t quite make sense to me. The government’s logic is a bit funny here.
(4) When the GIC was earning 9.5%, why were Singaporeans still only earning 2.5% on our CPF?
Also, before 2006, the GIC was earning 9.5% interest. How come we were still earning only 2.5% on the majority of our CPF from 1999 to 2006 then?
What happened to the other 7%? It’s a lot of money, you know?
I don’t get it. Is the GIC taking on so much risk, that they should earn so much more and Singaporeans should earn so little? I am really trying to figure out what the government really means here.
And also, since we have established that it is Singaporeans who are taking on the risks by mortgaging our CPF for the GIC’s use, we should be the ones earning the high interest rates on our CPF!
(5) Shouldn’t the government reward Singaporeans for giving our CPF to the GIC to invest by giving us high interest rates?
The government claims that because the GIC takes on the risk for investments, they should earn higher interest rates. But then, if there is no CPF in the first place, will the GIC even have this money to invest?
I really don’t get what the government is trying to make us believe here. Without the CPF, the GIC would amount to very little. In fact, the GIC should be thanking Singaporeans for being willing to unwillingly part with our CPF for them to use.
Actually, the government and the GIC should reward us instead for letting them use our CPF involuntarily.
Since the government is the GIC (the Board of Directors on the GIC are the Singapore prime minister, two deputy prime ministers and other ministers), then the government should reward Singaporeans! Not give us low interest rates!
(6) Since the GIC and Temasek Holdings started, how much of our CPF have they taken to invest?
Also, we now know that the Temasek Holdings used to take our CPF to invest. Since the Temasek Holdings was set up in 1974 and the GIC in 1981, how much of our CPF did they take the GIC and Temasek Holdings take to invest exactly?
(7) How much did the GIC and Temasek Holdings earn on our CPF which they did not return?
Also, how much did the GIC and Temasek Holdings earn in interest on our CPF, which they did not return to Singaporeans? Again, I don’t know if it makes sense for them to take the interest earned on our CPF to suddenly convert our CPF into their assets.
(8) How many billions did the GIC and Temasek Holdings earn on our CPF which they did not return?
Then, how many billions exactly that they have earned on our CPF which are not returned to Singaporeans’ CPF?
(9) Since Temasek Holdings stopped using our CPF to invest, are they going to return the past interest earned our CPF back to Singaporeans?
Also, since Temasek Holdings had suddenly claimed that they do no invest our CPF today. But we know they used to. Then, when did they stop investing our CPF? Will they return the interest earned on our CPF in the past back to Singaporeans?
(10) How much of the GIC and Temasek Holdings is made up of our CPF and the interest earned on our CPF which was not returned?
Actually, what is the full breakdown of the GIC’s and Temasek Holdings’ assets, which show clearly how much comes from our CPF, and how much comes from the interest earned that was not returned to Singaporeans, which they kept?
Finally, is the government more interested to help the GIC or help Singaporeans for our retirement?
Actually, one thing I am very, very confused about is this. All this while, the government keeps saying because the GIC takes on the risk, we should be kind to them and let them earn high interest rates. So, the government wants Singaporeans to accept the low interest rates.
But this is very confusing. Where does the government’s allegiance lie? When we voted for the PAP government, we voted for them to take care of us, right? How come now the PAP is more interested in taking care of the GIC instead of taking care of Singaporeans? Already, it is very uncomfortable that the government is the GIC, then now the government wants to take care of GIC first before Singaporeans, makes you wonder even more, right?
Today, Singaporeans earn the lowest returns on pension funds in the world. Other advanced countries earn an average of 7.4% on their pension funds.
Why does the PAP government want us to accept the low 2.5% interest and tell us that it is good enough for us, then give our money to let the GIC earn the high interest? Funny, right?
I don’t know about you, but I am very perplexed and confused. On many levels, the government’s explanation so far only throws up further questions. I really wonder whether the government is interested to take care of Singaporeans.
They go through such a roundabout way only to tell us that we should help the GIC earn high interest rates, by being willing to accept the low interest rates. But in my mind, Singaporeans are already not earning enough on our CPF. If the government truly is willing to care for Singaporeans, the government should tell the GIC to accept lower rates and let Singaporeans earn higher interest rates, right?
That’s why I am very confused. I really do not know what the government is trying to do.
Are they trying to help us or are they really more keen to help the GIC?
Then, what will happen to Singaporeans if the government is not willing to help us?
#ReturnOurCPF Event This Saturday 12 July 2014 4.00pm Hong Lim Park
So, this Saturday there will be the #ReturnOurCPF event. I don’t quite agree with the government’s logic that we should help the GIC earn high interest and accept only low interest for Singaporeans. It is already very bad that Singaporeans cannot retire, precisely because we earn the low interest rates.
We need to speak up and say NO to such bullying behaviour from the government. The CPF is our money. First, they never asked us if they could use it anyhow they like. Then, after taking our money away from us, they tell us they have a right to use it. And when it’s all said and done, they tell us that they want to continue helping themselves with our money and we should accept the low interest rates.
This is not right, on so many levels. I don’t even know where to begin.
This Saturday, we will see you. We have to speak up against this bullying. Do we allow such bullying behaviour to continue or do we want to stop the bullying and nip it right in the bud?
See you this Saturday. You can join the Facebook event page here.