Biggest election issue is CPF?
Now that polling day for the elections has been announced – perhaps the biggest issue that may be debated in the eight days of election campaigning may arguably be our CPF.
Difference between CPF % and CPF returns?
Whilst there may be many different issues relating to our CPF, perhaps the most significant one may be how much Singaporeans have in a sense, lost due to the difference between the returns derived from CPF funds and the interest paid on CPF accounts?
Transparency and accountability on CPF?
Of course, if the Government is transparent – it should disclose the historical yearly returns of say the GIC, yearly weighted average CPF interest rate on all the CPF accounts, yearly total cumulative CPF balance, yearly net surplus of annual CPF contributions less withdrawals, etc.
“Cumulative loss” of Singaporeans’ CPF?
From the above data, we can derive what is, in a sense – the “cumulative loss” of Singaporeans’ CPF since the inception of the scheme.It would be even better if the Government computes the figure.Let’s attempt to estimate this amount.
$5b excess returns in 1 year?
The excess returns of the GIC over the CPF interest in just one year is estimated to be more than $5 billion, on the current CPF balance of about $282 billion .Since we know that the current CPF balance is $282 billion – let’s make some assumptions.


… historical annualised returns of GIC – 6.5 per cent

… historical weighted average CPF interest rate – 3.5 per cent

… start date of 1981 – the year GIC was formed

… historical annual increase in net CPF contributions less withdrawals – 4 per cent


Difference between 3.5 and 6.5% is about $180b?

From the above, computing the CPF balance now assuming 6.5 instead of 3.5 per cent, is estimated to be about $460 billion.

Does this mean that the “cumulative loss” of Singaporeans’ CPF may be about $180 billion ($460 billion at 6.5% – $282 billion balance now)?


The above may be an underestimate as Temasek started in 1974 (not the 1981 used in the computation), and also the CPF interest rates and returns derived from CPF funds in the early years, may have been higher than the assumed 3 per cent differential between 3.5 and 6.5 per cent.

Any Govt keeps pension fund returns?

Are there any national pension funds in the world that keeps so much of the returns derived from its citizens?

Lowest real rate of return in the world?
Is our real interest rate on the Ordinary Account the lowest in the world since 1999 – when it had remained at just 2.5 per cent till now?
According to Phillip Ang – CPF interest rates were generally below the rate of inflation from 1972 to 1981 – “In 1982, Minister Toh Chin Chye confirmed that our CPF was used for “the construction of new factories, installation of new plant and equipment, expansion of infrastructure such as roads, ports and telecommunications, the building of houses and so on.”
On a cumulative simple interest basis, it was 63.5 per cent (CPF interest) against 65.4 per cent (inflation) during this period.On a cumulative compound interest basis. it was 85.1 per cent (CPF interest) against 98.5 per cent (inflation).
The mother of all our problems?
In the final analysis – is the “cumulative loss” of Singaporeans – arguably, the mother of most of our problems today?
Leong Sze Hian 

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