I wish to address the issue on whether the CPF is able to pay off all its members, if it is dissolved today.
The annual report of the CPF at 31/12/2012 showed total amount owing to CPF members to be $230 billion. This is invested in Singapore Government Securities totaling $229 billion, with a few other billions invested in other assets.
If CPF were to be wound up, will the government be able to pay the $229 billion?
The answer is clearly “yes”. The reserves of the government comprises of $198 billion in Temasek Holdings, $305 billion in MAS and “over $100 billion” in GIC. The total is over $600 billion.
If this were to happen, will the government be able to sell the assets to raise $230 billion to pay the CPF members? There is no need to. If the government were to issue bonds of $230 billion, that is backed by the $600 billion of actual assets, it should have not much difficulty.
Another way is for the government to “print $230 billion” of money to pay back the CPF members.
The actual amount that the government needs to pay back the CPF members will be much less than $230 billion. The outstanding loans owed to the HDB (which is a part of the government) should be a large sum. Surely, if the government were to pay back the CPF balances, the members should also pay back the balance of the HDB loan?
If you wish to verify my figures, you can check them here:
The winding up of the CPF is completely hypothetical and inconceivable. I have used this scenario to illustrate that the savings in the CPF is safe, and that the fear that there is no money to pay back the CPF balance is totally unfounded.
However, I do not support the current system where most of the savings are stashed away by an ever increasing minimum sum. This has to be reviewed, and a portion of the savings should be allowed to be withdrawn at age 55, even if the savings is inadequate to meet the minimum sum.
Tan Kin Lian