Tuesday, June 10, 2014

The Main Problem With The CPF

As an estimated 6,000 Singaporeans gathered at Hong Lim Park to attend the “Return Our CPF” protest, I am going to say something that might cause some offence to the speakers at the protest; "They are missing the plot!" As the many speakers at the event raised many valid questions on the CPF, one thing has not changed; Singaporeans still don't know what is happening to our CPF money.

To me, that's the big question of our CPF.

The speakers at the protest, organised by blogger and activist Han Hui Hui, seem more interested to question the low interest on the CPF, the inability to opt out of the Minimum Sum requirement, and the age citizens are allowed to withdraw their CPF money; however many are skipping on the problem of what is the CPF investing in. To me, that's a mistake.

No one knows where our CPF money is being invested in, and for me personally, that's more important than the "low" interest of the CPF. I mean if the investment is not panning out, then there's a reason for the "low" interest". Singaporeans will not be happy but the majority will understand. The problem is the question of what and where the CPF is being invested in and how well (or not) the investments are doing. To me, that's the big problem of the CPF.

In some countries, they are very clear on what and where their retirement funds are being invested in. In Singapore, this is a black hole. That's the main problem with the CPF. 


Anonymous said...

It is not a total black hole, as the bulk is invested in SGS, and much shorter term money market instruments. But yes you are right we do not know the composition of these investments.
Anyway I am surprised at the total silence from so many elected officials.
I used to work in a bank and we do see the flow of the CPF funds. But that was so many years ago. I am an old man now.

Ghost said...

The devils is in the details. Singaporeans do not know the breakdown and composition of the investments and I see this as a huge problem.

Anonymous said...

It is simpleCPF Board invests nearly all the monies in SGS(SPORE Govt Bonds) yielding 2.5%pa.So the Spore Govt borrows all the monies and they invest it for higher returns,through GIC and TH, and keep the excess returns.You will not suffer if GIC or TH lose money.,unless of course the Spore Govt default on their obligation to the CPF Board,ie cannot pay back the bonds liability on maturity.
So as they say in the financial world,your CPF monies is backed by the full faith and credit of the Singapore government. BOB TAN

Ghost said...

The problem with that sweet scenario is that no one (including our President) knows how well (or not) GIC and Temasek are doing. If they are losing money, then the Singapore Government is losing money which means the CPF Board is losing money. Considering almost all the CPF is in the GIC/Temasek basket, you can understand why Singaporeans are worried.