The Real History of the CPF and the Singapore Economy

Have you always wanted to know what really happened to our CPF? What did the government change over the years and what did they not tell you?

Today, I have compiled the most comprehensive history of the CPF, and how it has been intertwined with the Singapore economy, to such a huge extent that you will see here, that a lot of the problems that we face in our lives today are actually linked back to how the government has tied the CPF into too many aspects of the Singapore economy. I have trawled through several books, academic papers and government websites to compile this for your one-stop convenience on the real history of our CPF, which the government has been lacking to educate on. Please do spend some time to read this.

Most importantly, you need to know how Singaporeans have been made to shoulder the burden of the current problems – because it is YOUR CPF that the government is using.

(Much of the credit also goes to Mukul Asher, Linda Low, Phang Sock-Yong, Lawrence B. Krause, Yasue Pai and many others who have been quoted in this article on their research and analysis.)

So here goes. It is a bit long and I have divided the article into eight pages. But this is a really important article. Please do take some time to read this, or bookmark it and come back to read the later pages. It is really important that you read this because you will know how your life is being affected by how far the government has over-stretched itself, to over-extend your CPF for their purposes.

Pages 1 2 3 4 5 6 7 8

CPF was Started by the British in 1955

By now, you would know that the CPF was started in 1955 by the British. The British was actually studying various pension systems, but opted to adopt the CPF system because “the mood at that time was that colonies like Malaya and Singapore would not be colonies for much longer” and “the British government had simply been quite firm in making a political decision not to be financially burdened with the social security plans of the colonies“. Thus if the British government had adopted the “unanimous recommendations for an insurance-based social security scheme” which was actually proposed by several committees set up to study the implementation of a social security system in Singapore in the 1950s, Singaporeans would be seeing a more holistic social security protection system for us today, which would include unemployment insurance, for instance.

Of course, when the PAP took control of government later on, they were quite happy with the CPF system. But why? The PAP was able to manipulate the CPF for their own uses – primarily to generate income for themselves.

CPF was Used to Finance HDB’s Construction of Flats

The first change came in 1968. Our CPF was legislated to become “a source of funds for the government as will be witnessed in the CPF as the Housing Development Board (HDB)’s financing agent“.

Indeed, in 1968, “The CPF became an important institution for financing housing purchases from September 1968“. The PAP government passed “legislation (which allowed CPF) withdrawals from the fund to finance the purchase of housing sold by the HDB and subsequently sold by other public sector agencies as well.

Actually, prior to 1964, it was not the aim to get all Singaporeans to buy flats. In fact, the “original objective of the HDB … was to build flats for rental“. But then, the PAP government changed their objective to “selling flats to tenants in 1964“. And because asking people to buy flats did not take off, the PAP government thus “liberalised” the CPF and created the Home Ownership Scheme to let CPF be used “for the down payment and monthly instalments towards the purchase of public housing flats”.

But the CPF was also used to fund the HDB from broader level, which is lesser known to Singaporeans – “The CPF was the financing agent for the HDB at the macro national level and micro level of households, respectively and sequentially. First, at the macro economy level, the government borrows funds for development expenditure through the development fund before it built up budgetary surplus.” And “In the initial years, before the government built up budgetary surpluses, it borrowed funds from the CPF for its development expenditure budget – one important user being the HDB.” Thus “The CPF is clearly an important financial agent of the government whether from direct financing through loans as the CPF is mandated to invest its balances in specially issued government bonds or as indirect revenue generated through massive housing and ownership in all forms of real estate taxation and charges. A third micro financing modality is when CPF members drew down their savings to purchase housing.

Screenshot (86)

As such, “The HDB obtains two types of loans from the government budget, one as contribution to public housing, and the other for mortgage financing,” “interest of which is pegged to the prevailing CPF savings rate. The mortgage lending rate charged by the HDB to homeowners is 0.1 percentage point higher than the rate that it borrows from the government,” which is said to ensure “the sustainability of the financing arrangement.

In short, “CPF funds were lent to the Housing Development Board so that it could build flats“.

The government borrowed the CPF to finance the construction of HDB flats, then asked Singaporeans to use our CPF to “buy” the flats.

The PAP Government Increased CPF Contribution Rates to Finance the Construction of More Flats

Now, the CPF started off solely as a retirement fund and thus initially, the CPF contribution rates were low and only a small portion of our wages needed to be deducted. “At the time of its introduction in 1955, the CPF contribution rates were 5.0 percent for employer and 5.0 percent for the employee, for a total of 10.0 percent.” However, with the PAP government’s new plan to extend the CPF “to support the(ir) national home ownership drive“,  “in 1968, the government raised the CPF contributions by employers and employer from 5% to 6.5%” and “with just three increases starting in 1968, the contribution rate reached 10 percent by 1971, which was double the original rate. By 1974, the CPF contribution was 30 percent of a member’s salary.” The PAP government kept increasing the contribution rates until they “peaked at 25 percent of wages for both employers and employees from 1984 to 1986“.


In fact, in just a short span of just 7 years, “annual CPF collections increased more than four-fold from $46.9 million to $223.6 million between 1965 and 1971.

But why did the CPF contribution rates kept increasing upwards, from 10% in 1955 to 50% in 1985? By 1985, Singaporeans had to pay half our wages into the CPF! Why did the PAP government want so much money? Edward Ng said that, “Such a high savings rate is evidence of the intent to make CPF more than a pension scheme for retirement,” as indeed can be seen in how the PAP government has extended the CPF to be used for HDB construction.

But how else?

The Over-Use of CPF for Housing Contributed to the 1985 Recession

Notably, in 1982-83, there was an “unprecedented” growth in total overall construction of residential buildings. In fact, “the increase in public-sector (HDB) residential building construction was itself unprecedented … The number of units of residential buildings under construction jumped to 94,000 in 1982 from 59,000 in 1981; a record 77,000 units of residential buildings were completed in 1984, more than double that in 1983 and in any year in the seventies.

However, because of “The acceleration in public housing (HDB) construction in 1982- 83, (this) was considered by Krause to have been excessive in that it contributed towards ‘over-heating’ of the economy and the property slump and recession which followed in 1985-87. The Property Market Consultative Committee also similarly concluded that “the rapid increase in public-sector construction contributed towards the over-supply in the property market“. Indeed, 189,000 HDB flats were constructed during the Fifth Five-Year Building Programme when the original target set in 1980 was for the construction of 85,000 to 100,000 flats“.

It was asked, “did the acceleration in public housing construction serve other than a growth objective – in view of the fact that 1984 was an election year and a year for celebrating twenty-five years of achievement?” To that, “Krause (also hypothesized) that the acceleration in public housing construction (indeed) served other than a growth objective – 1984 being an election year as well as a year for celebrating 25 years of achievement as an independent nation.

In fact, Lee Kuan Yew later on admitted in his memoirs, “We made one of our more grievous mistakes in 1982-84 by more than doubling the number of flats we had previously built.”

Yet why did Lee Kuan Yew so vehemently pursued the housing programme then? Goodman, Kwon and White explained that he “believed that if people owned their own homes, they would be more likely to ‘fight the country“.

Indeed, Lee Kuan Yew had said in ‘From Third World to First: The Singapore Story 1965-2000:

My primary preoccupation was to give every citizen a stake in the country and its future. I wanted a home-owning society. I … was convinced that if every family owned its home, the country would be more stable … I had seen how voters in capital cities always tended to vote against the government of the day and was determined that our householders should become homeowners, otherwise we would not have political stability. My other important motive was to give all parents whose sons would have to do national service a stake in the Singapore their sons had to defend. If the soldier’s family did not own their home, he would soon conclude he would be fighting to protect the properties of the wealthy. I believed this sense of ownership was vital for our new society which had no deep roots in a common historical experience.

The government thus decided that home ownership was the way to make its citizens cast their lot with the new nation. With little surplus and private savings, the funds in the CPF accounts were identified as a source of valuable financing.

In other words, the HDB served as a social lock-in tool (for the citizens onto Singapore), whilst the CPF was used as the financial lock-in.

To surmise, “the boom in the construction sector burst in 1985 because it had been buoyed by artificial demand caused by the release of savings from the Central Provident Fund (CPF) for both public and private housing and public policies directed at a goal of 100 percent home ownership.

CPF Study Group in 1986 Asked the PAP Government to Stop Over-Extending the CPF for Housing but It Fell on Deaf Ears

In 1986, the CPF Study Group, recommended “that the authorities refrain from pursuing policies that would induce individuals to siphon more and more of their savings from their CPF to continuously upgrade their properties and to purchase additional properties, at the expense of other more pressing family needs and to the possible detriment of their ability to finance a decent old-age livelihood, besides contributing to inflating property prices.” They asked the government to restraint from the excessive use of the CPF to finance the construction of HDB flats.

However, the PAP government did not heed this early warning but instead did the “opposite” and “promoted the upgrading policy (again) and allowed the user of CPF funds for this purpose“.

The CPF Study Group had also recommended that “CPF members be allowed to opt out of making employee’s CPF contributions once a specified minimum balance had been accumulated, so as to give them greater freedom to use their money.

Indeed, it was said:

The rate of contribution to the CPF should not be used as a macro-economic instrument to control inflation as it has important repercussions on the allocation of consumption and savings contemporaneously as well as over time. Since its main (and original) objective is to provide for savings for old age, the combined rate of contribution should be set at a level consistent with this objective, and it should be maintained at that level. The use of CPF savings for the purchase of housing distorts consumption patterns, as pointed out by a comprehensive study of the CPF. The fulfilment of the political objective of home ownership by increasing CPF contribution rates so that more funds would be available for this purpose is, if true, economically inefficient.

So, you see, way back in 1986, warnings were already sounded against over-extending the CPF for purposes other than for retirement as this would be “economically inefficient”. However, these warnings fell on deaf ears. And the Study Group also highlighted the pitfalls of manipulating the CPF contribution rates for purposes other than for retirement.

Instead of drawing back on manipulating the CPF contribution rates, the PAP government went against the committee’s recommendations. They kept the employee’s CPF contribution at 25% in 1986 and 1987 while only reducing the employer’s CPF contribution rate – to 10%.

In fact, the same thing happened again after the 1997 recession.


And because of such a lopsided policy, today Singapore is only 12, or one of the 7% out of the 166 territories with social security in the world, where employees would contribute more into social security than employers.


What caused the PAP government to ignore such warnings (way back in 1986 or nearly 30 years ago) to stop their compulsion with the over-use of CPF funds to artificially inflate housing demand and prices is beyond common-logic comprehension. But perhaps when it is known that “the public sector and its GLCs may account for 60% of gross domestic product“, one might understand why the PAP government would favour policies that benefit employers more, at the expense of Singaporeans, in spite of the recommendations.

The PAP Government Over-Built Again and the Housing Bubble Burst in 1997

But the problem of over-construction wasn’t confined only to the early 1980s. Clearly, the PAP government never learnt its lesson.

As the PAP government became ballistic in its compulsiveness to profit from the housing market, it once again over-built HDB flats. And yet once again, when faced with the recession in 1997, the PAP government became at a loss.

Then-Minister for National Development Mah Bow Tan admitted that, “when the Asian Financial Crisis hit in 1997, … HDB ended up with 31,000 unsold flats“. What’s more, it took the PAP government more than 10 years later to admit the truth in 2009.

Yet, Mah Bow Tan had the cheek to say that this resulted in a “waste of taxpayers money”, but as history has shown, who was the one who repeatedly made the same mistake, in spite of numerous warnings? And who was the one who continuously ignored these well-intended advice and went head-on with their addiction to (over-)construction?

When the PAP government over-constructed in the early 1980s and partly caused the recession in 1985, they were forewarned not to repeat the same mistake and not to over-indulge themselves with our CPF monies. But they did not heed the advice and allowed housing prices to spiral out-of-control again from 1994, over-built yet again and by 1997, over-extended themselves yet again, this time with “taxpayers money”.

Will the PAP government ever learn their lesson, or will the obsessive compulsive addiction to cheap money from our CPF to build flats for profit be too much temptation to resist?

Indeed, today we are seeing the built-up of yet another housing bubble and feeble attempts by the PAP government to stoppage a potential burst.

Pages 1 2 3 4 5 6 7 8

Return Our CPF burning rose poster

Join the #ReturnOurCPF Facebook event page here.


    • @tan

      i guess, you are a woman’s, hmm, guess again, you are an old single woman, understand why are you so bitchy, you like stopping by, but always wrong door, your PAP’s door is not here, pls out ! never come back again ! here no welcome an old single woman like you , even no man in PAP wants you !

  1. I Am A New Citizen

    After reading Roy’s blog, I now realize my mistake.
    As a Singaporean citizen now, I fully understand the disadvantages of citizenship.
    I fully support all efforts to abolish CPF and NS.
    It’s definitely in my self interest to vote Opposition.

  2. Deaf Toad's Toothpick

    Does Ngerng really believe the rubbish he spouted? With all the accusations he made posts after posts, it would be hardpressed to believe that he won’t be sued over and over again.

    But it makes for good drama, I admit.

    • Monkey See, Monkey Do

      ” … its like saying the sky is blue because I am wearing a blue shirt.”

      Oh! You mean like;
      I once knew an old man who withdraw all his CPF money.
      Within 6 months he used up all his money on gambling (@ PAP’s 2 casinos) and women in Batam.
      And now he wants welfare from the PAP government.
      Because of this one instance (no proof that it happened)
      PAP government is fully justified to hold onto Singaporeans’ CPF money beyond 55 years under a set of ever “evolving” rules.

  3. Daryl

    It has always been the bane of Singaporeans that the govn is able to arbitrarily increase HDB prices year after year. It is not a free market as many professionals will attest to. How can it be when the govn owns the very flats we stay in and sets the prices based on factors that the govn control – like land costs, roads, carpark, recreation area costs etc !!!! Completely ridiculous !!! And the facts are that the monies in the CPF belong to the people and the govn should be responsible enough to manage the funds for the benefit of the people, not make use of them for their own enrichment !!! bull to the PAP !!! Crappy govn that we have !!!

  4. RYAN

    Lee Hsien Loong’s speech has brought a serious crisis for each CPF owner, not only govern long-term economic stagnation and corruption lead to social discontent over 10 years, also affect the government’s popularity. hope the people of Singapore unite forces, called on him to hand over power to step down as soon as possible.

  5. ThankURoy

    I am SURPRISED that @tan and @Deaf Toad’s Toothpick ‘read’ without realising that Roy is quoting from books and not come up with his own theory. Roy has made a GREAT EFFORT in bringing these information to the mass who may not be aware that experts have been warning the Govt. Whoever wants to SUE, should sue the source of the information, ie. the experts and authors of those books (including, the one who say ‘you will repent’).

    Blessings be with Singapore! (with people in the 60%)

    • The Oracle

      Roy quoted books but also put his usual anti-government its-easy-in-hindsight free-and-easy-with-the-numbers spin on everything.

      His numbers are rarely correct – for example: “By 1985, Singaporeans had to pay half our wages into the CPF!”. To be more precise at this time employees contributed 25% and employers contributed 25% so Roy concludes people are paying half their wages in CPF – but this is just wrong.

      The correct percentage in 1985, using an example of a $2,000 salary, is:
      Employee contribution: $500
      Employer contribution: $500
      Percent of total income to CPF = (employee + employer contribution)/(salary + employer contribution) = 1000/2500 = 40%
      Employee takes home 60% of total income or 75% of salary and at no time does he only receive 50%.

      It doesn’t matter that I’ve pointed this out before as Roy clearly doesn’t want facts to get in the way of a good story.

      • A PM Lee Fish Story

        I think PM Lee cares more for a discarded fishball stick than he does about disadvantaged Singaporeans.
        One brand new government agency because of a discarded fishball stick.

        Do you think PM Lee will form one new government agency because one Singaporean has been left behind?

      • ThankURoy

        Thank you @The Oracle, for highlighting the numbers, the way I thank Roy for his numbers.

        I think at the end of the day, the essence of the issue is ‘Are Singaporeans getting better?’
        Not just in terms of numbers stated in Statistics, but overall ‘FEEL’ as a Singaporean.

        @The Oracle cannot deny the fact that more SMCs being voted to the Opposition is an obvious sign that something is not right. Only about 30-over% votes given to an ex-PAP-related President is also a sign that more are getting unhappy with the incumbent. Social media is just a platform for more transparency.

        To add insult to Singaporeans, is the way that the incumbent solve problem, like forming a new agency, instead of looking at duplication of roles in the Ministries, over a ‘fishball stick’. It just goes to show how the incumbent too, does not want the facts (put up through the ‘voices’ in the social media) to get in the way of their ‘good show’.

      • The Oracle

        Definitely some truth in that – the world is changing and that it is much easier for citizens to criticize and harder to ignore them – and government needs to be more inclusive of all sectors of our society.

  6. anon

    Perhaps Roy could consider packing all the pages into a single file of a suitable format (eg .MHT, .PDF, .DOC .EPUB etc). It may be an easier read compared to 8 pages online all at one sitting

    Do take note of any copyright issues though.

  7. seesiwpeng

    @The Orcle…you lowly scum bastard dog is back after getting permission from your Line Leader?
    Who cares what you spew nonsense here, we allow you here to make u a scumbag bastardize idiot banana sucking dog eating from the crumbs of the table of all of us, as usual digging with fingers to satisfy of your lowly scum swine masters…
    honest to the bone, even unto you wearing a skirt is so insulting to women! asking you to screw a spider is so insulting to the creature…guess what, you are the lowest of evolution ever seen here on Earth!

    • The Oracle

      Hahahahaha! You can’t stand even the slightest criticism of Roy and this just proves you and your fellow members of Roy’s gang are not fit to run a country!

      • reply "The Oracle"

        The Oracle,
        in your country, Your happiness index ranked first outside,
        95% women never married , and you still enjoy the paper,
        don’t you think a severe deformity of Singapore, as a leader to be responsible,

        about you, The Oracle !
        you took huge pay daily , you talk a bunch of unrealistic here with a group of unemployed & unfortunately people, such person like you, if still alive today, better go as good as dead.

  8. The Oracle

    I apologise to all that m such a scum, please forgive me and I shall learn to jerk out well before coming to this Blog again.

    • The Oracle

      I apologize for being a PAP idiot-savant.
      My PAP parents dropped me on my head when I was an infant.
      They say it was an accident.

  9. 请他早点滚下台

    你们的总理不喜欢听到贪污这个字,那么, 用“贪心”两个字最适合他 。他170万年薪, 是全部4000户人家的生计总和,是美国总统的4倍。 可见他是那么的贪心, 用巨大地胃口来满足贪心, 排名全球贪心指数第一名。

    新加坡人民团结起来,推翻这个腐败贪心的领导人。请他早点滚下台 !

    Your Prime minister Lee don’t like to hear the ” corruption ” such word,
    therefor, use “greedy” word most suitable for him.
    His annual salary is 1.7 million USD, is the sum of all the 4000 people’s livelihood, is four times of the American president’s.
    Showing that he is so greedy, too greedy.
    with an huge appetite to satisfy the greedy, greedy index ranked first worldwide.
    Singaporeans unite to overthrow the corrupt greedy leaders.

  10. 他要挤干你的最后一滴血

    过了55岁继续扣押我们的公积金,因为李总理老婆的淡马锡控股某个交易亏本, 所以要拖死我们,那么某个交易赚钱,为什么不分给我们 ? 他老婆亏本要我们多赔10年, 他老婆赚钱分红没有我们,他要我们省吃俭用,租出房间来套现, TMD这一家子不是人 !

    做老公的李总理,要为老婆何晶每天从淡马锡控股拿巨额回报保密,什么天机不可泄密,一对缺德货色,不如他们早早死掉算了 , 他们活着对人民一点意义都没有, 反而整天控告人民, 搞到有工作的人, 被失去工作, 没工作的人,被晾在一边。好像一切不关他们的事。不做好事的总理,不为人民做事的总理, 他们是人民的公敌, 现在,人民要团结,把他赶下台。

  11. Pingback: What PAP Has Done to Your CPF and Doesn’t Want Singaporeans to Know (The Real History) | The Heart Truths
    • The Oracle

      Even that is way too high. The potential short-changed amount:

      1) Start with total funds in CPF today: $264,767,600,000

      2) Interest paid ranges from 2.5% to 5% with many getting 3.5% to 5% as Roy asserts more than half have circa $55,000 (less than the potential $60,000 that gets an extra 1%). All in all we can assume the average is 3.5% as paid on the special Singapore government bonds (those with smaller balances do better and those with bigger balances do a bit worse).

      3) What should CPF pay? Given GIC real rate of return over the past 20 years of 4.1% and inflation over the same 20 years of 1.9%, a case can be made for 6% return instead of 3.5%.

      4) Other assumptions: Average CPF member in the scheme for 20 years, annual wage growth of 6% notional. I put it all in a spreadsheet and:

      CPF Contributions CPF Actual CPF Ideal
      6.00% 3.50% 6.00%

      1995 5,250,000,000 $5,433,750,000 $5,565,000,000
      1996 5,565,000,000 $11,383,706,250 $11,797,800,000
      1997 5,898,900,000 $17,887,497,469 $18,758,502,000
      1998 6,252,834,000 $24,985,243,070 $26,512,016,160
      1999 6,628,004,040 $32,719,710,759 $35,128,421,412
      2000 7,025,684,282 $41,136,483,868 $44,683,352,036
      2001 7,447,225,339 $50,284,139,029 $55,258,412,018
      2002 7,894,058,860 $60,214,434,815 $66,941,619,130
      2003 8,367,702,391 $70,982,512,009 $79,827,880,813
      2004 8,869,764,535 $82,647,106,223 $94,019,504,068
      2005 9,401,950,407 $95,270,773,611 $109,626,741,744
      2006 9,966,067,431 $108,920,130,479 $126,768,377,726
      2007 10,564,031,477 $123,666,107,625 $145,572,353,755
      2008 11,197,873,366 $139,584,220,325 $166,176,440,748
      2009 11,869,745,768 $156,754,854,906 $188,728,957,707
      2010 12,581,930,514 $175,263,572,910 $213,389,541,514
      2011 13,336,846,345 $195,201,433,928 $240,329,971,130
      2012 14,137,057,125 $216,665,338,240 $269,735,049,950
      2013 14,985,280,553 $239,758,390,451 $301,803,550,333
      2014 15,884,397,386 $264,590,285,411 $336,749,224,582

      Difference: $72,158,939,171
      Per member short: $24,052.98
      Above based on average balance of: $88,196.76
      For Median balance of $55,000 as stated by Roy:
      Per member short: $14,999.57

      So, the average member as defined by Roy has about $15,000 less in their CPF account, subject to confirmation of my assumptions. You can’t count the money withdrawn over the years for housing loans unless you also count the profit members have made on those properties.

      $15,000 is still significant but nothing like the crazy numbers Roy claims.

      • reply The Oracle

        old man at trickery and sly wily like old fox, you are the black hand ruined your premier

  12. Pingback: 行动党是如何操纵我们的公积金资金?为什么他们不让新加坡人民知道公积金的历史真相?《第一部分》 | The Heart Truths
  13. Pingback: How PAP Created Inequality in Singapore: Will Singapore Collapse? | The Heart Truths
  14. teoenming

    Singapore Minister Mentor Lee Kuan Yew and Prime Minister Lee Hsien Loong Want Teo En Ming Dead

    Singapore Minister Mentor Lee Kuan Yew and Prime Minister Lee Hsien Loong want Teo En Ming dead. Lee Kuan Yew and Lee Hsien Loong want Teo En Ming to die young. I am only 36 years old. I do not want to die young. I want to live to a hundred years old and beyond!!! I want to live to a hundred years old and beyond!!! I want to live to a hundred years old and beyond!!! I want to live to a hundred years old and beyond!!! I want to live to a hundred years old and beyond!!!

    In fact, I want to live forever!!!
    In fact, I want to live forever!!!
    In fact, I want to live forever!!!
    In fact, I want to live forever!!!
    In fact, I want to live forever!!!

    Teo En Ming has filed an official complaint against the Singapore Government at the United Nations Human Rights Council Branch and the International Criminal Court. Read the letter here:


    Teo En Ming’s Open Letter (Plea for Medical Help/Assistance) to World Leaders dated 27 Aug 2010. Read the letter here:

    Mr. Teo En Ming (Zhang Enming)
    Singapore Citizen
    Republic of Singapore
    14 Jan 2015 Wednesday

  15. Pingback: This is How the PAP is Not Taking Care of Singaporeans | The Heart Truths
  16. Pingback: Thoughts on CPF and Update Thirteen of Defamation Funds | The Heart Truths

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