On 26 May 2014, socio-political blogger Roy Ngerng was instructed by Prime Minister Lee Hsien Loong through his lawyer to remove four additional posts about the CPF and a Youtube video from his blog The Heart Truths because he had claimed the earlier apology sent by Roy Ngerng was not genuine. Unless he removed the additional posts, aggravated damages will be filed against him. Roy Ngerng had little choice but to remove the posts in question. However, we believe the PM’s demand is an abuse of power as none of those posts had defamed him in any way. We have re-produced the four posts and video and urge you to share it on your facebook, blog, twitter etc to express your disapproval of the PM’s bullying tactics.
PICTURE: How We Are Not Told that Our CPF Monies are Used to Invest in GIC
- Our CPF monies is invested in the Singapore Government Securities (SGS) and Special Singapore Government Securities (SSGS). (link)
- “Under the Protection of Reserves Framework in the Singapore Constitution of the Republic of Singapore, the Singapore Government cannot spend any monies raised from Government borrowings. All the proceeds from the Government’s borrowing must therefore be invested in reserves.” (link)
- “Our reserves are managed by three agencies – the Government of Singapore Investment Corporation (GIC), Temasek Holdings (Temasek) and the Monetary Authority of Singapore (MAS).” (link)
- GIC has assets of S$309 billion and earns returns of 6.8%. (link & link)
- Temasek has assets of S$198 billion and earns returns of 15%. (link)
- MAS has assets of S$322 billion. I couldn’t locate the rates of return. (link)
- In total, the overall funds managed amount to S$829 billion.
- Can we thus assume that there are about S$800 billion in our reserves?
- Here is the first question – since our reserves are borrowed to be invested, how much is the rate of return to our reserves?
- This is important because this will help why the “average yield” of the SGS (securities) is only 2.44%. This is peculiar because if GIC and Temasek are earning 6.8% and 15% respectively, then why are the securities earning only 2.44%? (link)
- According to the CPF Board, “the SMA currently earn either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is the higher.” Thus “CPF members will continue to enjoy a risk-free interest rate of 4% on their Special and Medisave Accounts (SMA) from 1 April 2013 to 30 June 2013.” (link)
- However, for the interest rate for our Ordinary Account (OA), this interest rate is “derived from the major local banks’ interest rates” which is 0.21%. The “legislated minimum” interest rate for the OA is 2.5% so the OA interest will “remain unchanged at 2.50%”. However, this is peculiar because if our CPF monies are invested in the securities and not with the banks, then why is our OA’s interest rate pegged to the banks’ interest rates and not to the securities? Are we being shortchanged? And also if our CPF monies are invested in two types of securities – SGS and SSGS – then why are our SMA’s interest rate pegged only to one – SGS? What is the interest rate for the other securities – SSGS? (link)
- Apparently, even though our CPF monies do not seemed to be receiving the full interest rates for their investments, “Singaporeans benefit from the investments of GIC and Temasek … through the Net Investment Returns Contribution (NIRC). This amounted to S$7.7 billion in FY2012. (link & link)
- According to the government, the NIRC “has allowed the Government to make further investments for the long term, such as in education, R&D, healthcare and improving our physical environment.” However, my question is – who really benefits? (link) You can also read an article by Mr Leong Sze Hian (link) and the Citizenship-Ownership Democracy (link) for their further analysis on the NIRC. On a side note, you can also read an article by Singapore Notes on why the government’s borrowing of our CPF is risky.
- But even though the government returns the benefits of the investments through NIRC, “Temasek will occasionally receive capital injections from the Singapore Government for specific projects, usually ones that are commercially less viable but are politically significant for the government. Most recently, Temasek’s projects with Khazanah Nasional in M-S Pte Ltd and Malaysian Wellness township were given money from the government.” So, this puts to the question – how much does the government inject into Temasek Holding (and perhaps GIC?)? Is this amount higher than the NIRC? (link)
There are some other interesting points which came up:
- Interestingly, the government claims that “revealing the exact size of assets that GIC manages will, taken together with the published assets of MAS and Temasek, amount to publishing the full size of Singapore’s financial reserves. It is not in our national interest to publish the full size of our reserves. If we do so, it will make it easier for markets to mount speculative attacks on the Singapore dollar during periods of vulnerability.” However, the exact size of assets can be found on the Sovereign Wealth Fund Institute’s ranking of sovereign wealth funds. This thus cast the government’s explanation of their intention of not revealing GIC’s assets into doubt. If anyone overseas could readily obtain information on GIC’s assets, then they would be able to know what the full size of Singapore’s reserves is, isn’t it? If so, is the intention to not reveal GIC’s assets to prevent other markets to know the full size of our reserves, or is it to prevent Singaporeans themselves from knowing?
- I also find it strange that when asked if GIC invest CPF monies, GIC had said that, “The short answer is that GIC manages the Government’s reserves, but as to how the funds from CPF monies flow into reserves which could then be managed by either MAS, GIC or Temasek, this is not made explicit to us.” This is a non-answer.
Ultimately, the question are a few:
- Why are GIC and Temasek earning 6.8% and 15% when the Singapore Government Securities is earning only 2.44%?
- Why are GIC and Temasek earning 6.8% and 15% when our CPF OA and SMA are only earning 2.5% and 4%?
- Why is our CPF OA’s interest rate pegged to the bank’s interest rate of only 0.21% when our CPF monies are invested in the Singapore Government Securities is earning only 2.44%?
- Why is our CPF’s SMA’s interest rate based on only the Singapore Government Securities (SGS) when the CPF is also invested in the Special Singapore Government Securities (SSGS)?
Chart 3: Temasek Review 2012
Chart 4: Sovereign Wealth Fund Institute
Chart 6: CPF Trends Minimum Sum Scheme
Chart 7: CPF Trends Medisave Scheme
Chart 11: The World Bank Total reserves
Chart 12: The World Bank Total reserves
One of the richest countries in the world and the richest by per capita, and the people the poorest in the world. Does this make sense to you? Sovereign wealth funds which earn high interest rates but where the interests are not channeled back to the people. The people are required to put aside higher and higher minimum amounts in their CPF and Medisave, which they otherwise cannot take out to use, so much so that fewer and fewer Singaporeans are able to meet this amount and have the smallest pension in the world. Doesn’t make sense. Doesn’t make sense. You decide if you still want this government at the next election. Note: You can also read a similar article that I had written previously here.
Where Does Your CPF Go?
As I had written before, our CPF is invested in government bonds. The government bonds are borrowed by the government and invested in the reserves. The reserves are managed by GIC, Temasek Holdings and the Monetary Authority of Singapore. As such, it is without question of a doubt that our CPF is being used to invest in the GIC and Temasek Holdings. Now, why is this important?
Why Your CPF Is Not Growing
This is important because currently our CPF only earns 2.5% to 4%. But the GIC earns 6.5% in USD terms and Temasek Holdings 16% in SGD terms. Now, since our CPF is being used to earn 6.5% to 16%, why are we earning a miserly 2.5% to 4%? What this means is that the government is taking our CPF to use for their own investments, but they have chosen not to return our CPF monies to us. If you think about it, if you decide to invest your money in a fund, would you accept if the investment firm tells you – thank you for investing your money with us. This fund earns 16%, but I am only give you 2.5%. Thank you very much. Would you accept it? You wouldn’t! You would say – wait a minute. I gave you MY CPF to invest. If you earn 16% on it, then you should return what I have earned back to me. I might pay you a 1% administrative charge for managing my funds for me, but you have to return the rest back. Indeed, this is what most investment firms do, and this is what other retirement funds in the world do as well. So, it doesn’t make sense that Singaporeans are only earning 2.5% to 4% on our CPF when our CPF is helping the government earn 6.5% to 16% for their reserves. But do you know what the government tells you?
The Government Doesn’t Want To Give You The Full Return Of Your CPF
If you look at the CPF website, they tell you that your CPF Ordinary Account (OA)’s interest rate is “based on the 12-month fixed deposit and month-end savings rates of the major local banks” and that your Special and Medisave Account (SMA) is pegged to the government bonds (which stands at 3.19%). First, why is your CPF OA’s interest rate pegged to the interest rates of banks when your CPF has nothing to do with the banks? Second, if your CPF is being used to invest in GIC and Temasek Holdings, why is your CPF interest rate not pegged to their interest rates instead? Something is not quite right, isn’t it? Do you think the government should come out to explain this?
The PAP Is The GIC: The PAP Knows How Your Money Is Being Invested In The GIC
But do you know there is something even more sinister? The GIC claimed that, “GIC manages the Government’s reserves, but as to how the funds from CPF monies flow into reserves which could then be managed by either MAS, GIC or Temasek, this is not made explicit to us.“ They also claimed that, “The Government, which is represented by the Ministry of Finance in its dealings with GIC, neither directs nor interferes in the company’s investment decisions. It holds the board accountable for the overall portfolio performance.“ But do you know who is on the Board of Directors of the GIC? It is the Singapore Prime Minister Lee Hsien Loong, the two deputy prime ministers Tharman Shanmugaratnam and Teo Chee Hean, the Minister for Education Heng Swee Keat and the Minister for Trade & Industry Lim Hng Kiang. Lee Kuan Yew is the Senior Advisor. So, how can it be that the GIC has no “explicit” knowledge as to how our CPF is being managed by the GIC? How is it possible that the government does not direct nor interfere in the GIC? If so, the PAP government knows exactly how they are using our CPF to invest in the GIC, then if that’s the case, why do they tell us they don’t or are not? Also, if the PAP knows that our CPF is being used to invest in the GIC, then why does the PAP not return us the interest earned on our CPF? What is the PAP trying to hide?
Singaporeans Are Losing $300,000 In Our CPF
In fact, according to Professor Christoper Balding, “If the average Singaporean had earned the average Singaporean wage since 1980 and saved the amount required by law but earned the GIC long term average rather than CPF interest, the average Singaporean would have approximately $850,000 SGD in the bank. This is approximately $300,000 more than they would have earned with the same amount of savings in a CPF account.” He added that, “To put this number in perspective, Singaporeans pay higher fees than what the typical hedge fund would charge.” Here’s another tibit – according to the GIC, the GIC fund managers are “paid a fee” to manage our CPF. Then, on top of the $2.2 million that Singaporeans are already paying to the Singapore prime minister with our taxpayers’ money, then how much more are we paying to the Singapore prime minister from our CPF monies for his “fund manager fee”? And how much more are we paying to the other PAP politicians who are fund managers in the GIC? If so, why is it that we are earning such low earnings on our CPF because the GIC and Temasek Holdings doesn’t return the money that they are using our CPF to earn, and why do they take this money to pay themselves fees? In fact, Prof Balding had also highlighted that, “The earnings in excess of 2.5-4% that the government keeps for itself that it does not return to CPF savers are directly harming Singaporeans who are on average $300,000 poorer.” He also stated that, “It is complete hypocrisy by the government to publicize the supposedly amazing job it does managing Temasek and GIC which supposedly earn 16% since inception from public assets and 7% in USD term over 20 years from public assets, then plead poverty when paying CPF holders a paltry 2.5%. The wealth of Singapore which has been funded by the Singaporean people belongs to the Singaporean people.”
The Government Does Not Give Us Full Information As To How Our CPF Is Being Invested In
Finally, Prof Balding also said that, “The Singaporean government refuses to provide any of this information (of information about their investments, and how much they are paying their investment managers), hiding basic information that would be considered standard information in the marketplace or if owned.” Now, take a look for yourself – this is the annual report of the world’s largest sovereign wealth fund in the world, the Norway Government Pension Fund Global: http://www.nbim.no/en/transparency/reports/2013/annual-report-2013/ Then, take a look at the annual report of the GIC, ranked the 8th largest sovereign wealth fund: http://www.gic.com.sg/images/pdf/GIC_Report_2013.pdf Do you see the clear discrepancy? Why is the largest sovereign wealth fund in the world able to let its citizens know with clarity how and where their monies are being used and the GIC is unable to do even a shred of that? I don’t think this needs to go beyond further explanation. Here are two questions:
- Why is the PAP government not transparent about how our CPF is being invested in the GIC and Temasek Holdings in?
- Why does the PAP not provide full accountable reports on how our CPF is being invested in?
As a citizen, do you think it is your right to know how your CPF is being invested?
Once, We Earned 6.5% On Our CPF. Now, We Earn The Lowest Interest Rate In The World
In fact, do you know that at one point, our CPF was earning 6.5% in the 1980s? Singaporeans weren’t always earning only 2.5%. In fact, we were earning 6.5% on our CPF from 1974 to 1986. In 1994, the PAP government pushed this down to the lowest ever since 1963 – to 2.5% and in 1999, they pushed it down to 2.5% and it had remained at 2.5% ever since. Now, not only did the PAP pushed down the CPF interest rate to only 2.5%, this 2.5% is the lowest interest rate in the world for pension funds, and Mr Leong Sze Hian had also shown that this is the lowest real interest rate in the world. In fact, when you compare to how much other similar provident funds in Hong Kong, Malaysia and India earn, they earn between 6.5% to 10%, yet ours underperform at only 2.5% to 4%. So, why are Singaporeans made to earn the lowest interest rates in the world? Why is the PAP doing this?
Singaporeans Pay The Highest CPF Contribution Rate In The World, But Have The Least Adequate Retirement Funds
Chart: Social Security Programs Throughout the World, Social Security Programs Throughout the World: Asia and the Pacific, 2012, Social Security Programs Throughout the World: Europe, 2012, Social Security Programs Throughout the World: The Americas, 2011, Social Security Programs Throughout the World: Africa, 2013, Coordinating Healthcare and Pension Policies: An Exploratory Study
But how about individual Singaporeans? Do we have enough to retire on? Strangely, several studies have revealed that Singaporeans have the least adequate retirement funds among the high-income countries and even compared to regional Asian countries!
- Also read: SHOCKING Facts About Our CPF in Singapore! (Part 1)
- Also read: SHOCKING Facts About Our CPF in Singapore! (Part 2)
The CPF Minimum Sum Grew Much Faster Than Inflation But Wages And Our CPF Barely Grew
Recently, the PAP government had again increased the CPF Minimum Sum to $155,000. According to him, the CPF Minimum Sum increased by 4.7% even though inflation increased by only 2.4% last year. What’s more, do you know that, “since 1997, our real median wages had grown by only 1.9% and the real returns on our CPF is only 0.7%. However, the CPF Minimum Sum had grown by a massive 5.2%, in real terms.“ To put this into perspective, if our wages had grown as fast as the CPF Minimum Sum had, it would mean that the lowest wage that Singaporeans should be earning today is $3,200. But today, half of Singaporeans earn less than that. No wonder why nearly 90% of Singaporeans aren’t able to meet the CPF Minimum Sum, isn’t it? In fact, you can see that from 1996 onwards, the CPF Minimum Sum have always grown by much faster than inflation. Not only that, in some years, in the late 1990s and in 2009, the CPF Minimum Sum even grew by more than 10% every year. But why does the government need to increase the CPF Minimum Sum by leaps and bounds? Do you know that in 2008, Temasek Holdings lost $58 billion? This is equal to 40% of the value of our CPF in 2008. Now, remember, our CPF is being used to invest in the GIC and Temasek Holdings. In 2009, the CPF Minimum Sum was suddenly increased by more than 10%. Does this have anything to do with it? So, the CPF Board might claim that 48.7% of CPF members were able to meet the CPF Minimum Sum. However, this is only for “active” CPF members who were able to meet the Minimum Sum “either fully in cash, or partly in cash and partly via a property pledge”. Thus, it is estimated that if we include “all” CPF members who are able to meet the Minimum Sum “fully in cash”, nearly 90% of Singaporeans wouldn’t be able to do so.
The Government Makes You Pay Interest To Yourself To Borrow From Yourself
I had also previously written about how Singaporeans use our CPF to purchase property, we are required to pay an accrued interest back. According to the CPF Board, “If you sell your HDB flat, you need to refund the principal amount you had earlier withdrawn for the purchase of the flat, including the accrued interest, to your CPF account. This interest is the amount you would have earned, had the savings not been taken out.” Now, think about it, this is your money. If you want to take your own money to use, should you have to pay an interest on it? And even if the interest should be paid, the government was paying it in the first place – why are you made to pay for it now? Also, according to the government, “Accrued interest needs to be refunded to our CPF accounts upon the sale of our home as long as the sales proceeds is sufficient to pay back the principal and interest.“ Now, as I had shown before, if a person buys a $300,000 flat and sells it after 30 years, the person would have needed to pay more than $220,000 in accrued interest. After paying for the accrued interest, will you still have any profit left? If not, does that mean that your property doesn’t net you any investment return at all? However, what is more absurd is this – the government claimed that, “When international studies on pension systems make comparisons across countries, they often ignore this fact (and) … they do not take into account the fact that Singaporeans also have used their CPF monies to pay for their homes.” First, does that mean that when you want to retire, you would need to sell your home so that you can have enough cash to retire on? Second, where would you then live? And third, whoever in the world include their homes as part of their retirement funds?? Only in Singapore does such an occurrence happen!
- Also read: Truth Exposed: The Dirty CPF-HDB Scheme To Trick Singaporeans
- Also read: CPF: The PAP Still Not Telling The Complete Truth, Contradictions Revealed
So, Where Is Really Happening To Your CPF?
If you can see the big picture, this is what is happening to your CPF:
- The government makes Singaporeans sacrifice the largest proportion of our wages in the world into CPF.
- The government then pays Singaporeans the lowest CPF interest rates in the world.
- This has enabled the government to earn the 8th largest retirement funds in the world.
- But it has caused Singaporeans to have one of the least adequate retirement funds in the world.
- Meanwhile, the government takes our CPF to earn the 8th and 9th largest (GIC and Temasek Holdings) sovereign wealth funds in the world.
- The government then uses our CPF to earn 6.5% to 16% for themselves.
- But they return only 2.5% to 4% to Singaporeans.
- Prof Balding had shown that the interest that is not returned means that the average Singaporean is losing $300,000 in cash.
Not only that, as I had mentioned, if wages had grown as fast as the CPF Minimum Sum has, Singaporeans should be earning a minimum wage of $3,200. In another article, I had also calculated how Singaporeans are losing our wages and that if we were to pay the rightful amount of our wages, the lowest income earner would earn $3,200 and the median income earner would earn $6,100 (as compared to $3,250 now). So, because of our wages are stolen from us, we are not able to accumulate more in our CPF.
- Also read: How The Government Undercuts Singaporeans’ Wages
- Also read: Singapore: First World Economy, First World Costs, Third World Everything Else
Your Labour Is The Collateral For Your CPF But here’s the final nail in the coffin. As I had explained, the government borrows our CPF for investment. Our CPF forms part of the national debt, which currently stands at 115% of GDP. Let me explain this – in other countries, the national debt is money the government owns to another country. In that situation, the citizens would pay for the debt. However, in Singapore’s case, the 115% of the debt is owned to Singaporeans. And if this debt is owned to Singaporeans, who pays for the debt? The government? No. You pay for it. So, the government borrows money from you, but makes you pay for it. Makes sense? Of course not. Maybe let me explain why this is important – when the government borrows from your CPF, they need to pay you a collateral for borrowing your money, right? And since you are also the one paying back the loan, then you have to pay for the collateral. And what is this collateral? – it is your hard labour. In simple words, what this means is that the government has locked Singaporeans into a situation where they take your CPF to invest and because they need this constant source of funds for their investment, the only way that this source of funds is maintained is if you keep working. If you see how this flows, the only to keep you working is if you do not earn enough to be able to save and they do not give you high enough returns on your CPF for you to be able to save as well. Do you see the big picture now? This is all intentional. The PAP Has Been Cutting Down On Singaporeans For 30 Years In 1984, the PAP government had wanted to increase the retirement age but they were unsuccessful at doing so because Singaporeans rejected the idea. In 1986, the PAP then implemented the CPF Minimum Sum. This caused our CPF to be effectively locked up and because we couldn’t withdraw our CPF, we were forced to work longer and had to retire later. In 1994, the PAP drove up the CPF Contribution Rate to a high of 40%, and pushed down the CPF interest rates to a low of 2.5%. From 1996, the CPF Minimum Sum started growing by much faster than inflation, trapping even more of Singaporeans’ retirement funds inside the CPF. From the mid-1990s, the wages of low-income Singaporeans remained stagnant and real wages dropped. In 2004, the PAP then started a massive import of cheaper labour, depressing the wages of Singaporeans further, causing Singaporeans to be less able to accumulate our CPF.
CPF: All Part Of Their Plan
If you can finally see the full picture, you will understand how the CPF is used as the whole tool to entrap Singaporeans. PAP’s ability to thrive depends on how much they can entrap our CPF for their own uses and investment. And the only way to entrap your CPF is for you to be in enforced labour for longer periods of time, so that your labour can be used as collateral to generate the CPF they need to fuel their investments. It has always been part of a plan. Perhaps now it would be clear why I am being gunned down. On 7 June 2014, we will be holding an event to demand to the Singapore government to #ReturnOurCPF. For our future, our livelihoods, for our families and our children, we have to take a stand for ourselves. We have to turn up in full force to demand that the government stop taking Singaporeans for granted and to return to us what is rightfully ours. Show your support by signing the petition here, and by coming down to the event on 7 June. See you there. Remember, sometimes for our freedom, we have to fight for it. You can join the Facebook event page here.