CPF MYTH - Is CPF Really Risk Free?

[Thick Face Black Heart]

Obviously, WP IB and people have been disciplined after my little "expose" of such childishness and this could only be good for the REAL reputation of the party.

That's why people love to use you as punching board. To begin with, your loaded sentence already assumes there is such a thing as a "WP IB". And then you claim that this supposed IB was "disciplined" by your expose. Quite outlandish claims.

And of course, few believe your motive is to benefit WP's real reputation. You read about my lady and her torn skirt analogy? Applies also to how you reacted to the YSL saga too when all of us were trying to discreetly/quietly hand the poor lady a jacket whilst you were there shouting and attracting attention to the hole in the skirt.

ANYWAY, back to the topic which is the CPF:

(i) Analogy to Greece not correct. Theirs is perpetual deficits caused by over spending and failing to collect taxes from evaders. Our problem is that we have huge surpluses and growing reserves (which obviously are making loads of money over the long run - long run being measured in blocks of 6year-10year economic cycles), but our CPF members are getting paltry returns. In a way our problem is the direct opposite of Greece but the issue is one of accountability and transparency and why members seem shortchanged.

(ii) Default risk is actually almost non-existent. This is because in the worst case scenario, the govt can simply print money to compensate SSGS bond holders, which can in turn compensate CPF accounts. If in early 2009 the unthinkable happened and there was a run on the 3 major SG banks, the govt would have simply printed money to stabilize the system, guaranteeing all deposits. The long term effect however would be inflation and misallocation of capital. The currency would plummet, investors would flee, and imports would get incredibly expensive, hurting the economy.

(iii) Basically your article has got big picture correct. But to re-focus down on the main points:

(a) There lack of transparency in flow of funds and GIC/Temasek returns vis-a-vis CPF member account returns

(b) There is policy risk in that the govt can shift goalposts anytime and enact new policies like CPF life anytime without needing any sort of approval from the electorate

(c) No inflation protection for CPF account members. No guarantee that CPF life payouts will also be stable over time. Again, relates to point (b) about govt being able to arbitrarily change the rules.

(d) Illiquid investments by GIC and Temasek means that in event of financial crisis, govt may have to bail out SSGS bond holders, and indirectly, bail out account holders, using unconventional monetary measures which can lead to inflation and currency depreciation. In other words, we don't know extent to systemic risk. Again, relates to point (a) about lack of transparency. We need some independent body to do a comprehensive study to see what kind of systemic risk is present in the CPF-MAS-GIC/Temasek trifecta system.

(e) CPF has lost its original intent of being a retirement plan and has devolved into an escrow account to ensure property and medical bills are paid for. Govt wants CPF to be a tool by which burden on the state is minimized. This however makes it enact policies that run contrary to the interest of CPF members.

 

[winnipegjets]

Everyone is knocking CPF but Singaporeans need to realise that without CPF, very few would have any savings of any form whatsoever.

CPF is not a savings scheme ...it is daylight robbery.

There is this far fetched idea that if there were no CPF deductions, Singaporeans would invest the money themselves and achieve far higher returns because CPF is returning pittance in comparison.

Look even Americans don't save for retirement ...http://www.cnbc.com/id/101701441

Sinkees would rather take a chance with their money than to let the government rip them off slowly and surely.

Government takes 25 percent of our income. Surely, it can do better than paying 2.5 percent return. With that huge pool of funds, it can pay a pension of 40 percent of the retiree's best 5 years' income.

But the government won't do it because the CPF is a cheap source of funds and to set up a pension fund, that source of cheap funds is lost.

We all know that nothing could be further from the truth. The majority would simply fritter away the additional take home pay on vices or idle pursuits. Only a small number would actually be financially astute and disciplined enough to create their own retirement funds and manage the money to achieve a good return.

Let's face ...the majority - I would say 80 percent - of people have no clue on managing their investments. Also, the cost of investment for an individual is many times higher than that of a large fund.
A pension fund is the answer. It is tried and tested and works. Don't bring up Greece because they didn't set up the pension fund as a separate entity.

The CPF scheme is a forced savings scheme and in this regard, it does an excellent job. It also helps cash flow immensely when it comes to purchasing property.

I thought you were smarter.

To those who cash out of the Singapore system, it is a windfall that emigrants from other countries do not have.

And how many can cash out? We don't need a scheme to cater to a few.

For those who stay on, it provides an income for life on par with the various pension and superannuation schemes around the world.

Total hogwash!!!!!!

 

[tanwahp]

Obviously, WP IB and people have been disciplined

That is why you have become known for not making sense.

An IB is sent by an organization; why would the organization discipline them for sending them.

 

[steffychun]

Haha, it actually means ABSOLUTELY NOTHING to me but if it really makes you feel good and shiok, so be it lor! I do not depend on such thing to live my life and most important of all, I guess only real loser in life will be so concerned about such inconsequential points to make them feel good.

Goh Meng Seng

I thought you like it. Or are you still a lowly Captain (NS)?

 

[davetan3]

All money in the world comes from the US government. They are the ones that print the $$.

 

[soIsee]

I did not wanted to post this as I had not been coming here for a long time.

I cannot be associated anymore with losers in life that had been taken for a ride with their money by somebody and come here now to complain loudly that their money is withheld from them and they cannot meet the required amount of deposit required by their rulers.

If you Sinkie are not that stupid ( and balless to add), you would have know that by now you have been swindled of 2 or more times of what you would have gotten in your accounts with SOMEBODY MAKING YOU COUGH OUT YOUR SO CALLED HARD EARNED MONEY while they become your investor but the gains from such investments ARE NOT RETURNED fairly to you.

Look here. Example is if I had invested, let's say $100,000 ( you could add another 4 zeros and change the first significant digit to anywere from 1 to 9 which GIC had done this) of your CPF money back in the 1990s.

The yield from these investment year on year would be not less than 12%.

This is just returned yield not even capital appreciation taken into account yet.

So you are not that stupid, you could by now calculated with the yield from 1990 to 2014, what would your real returns would be and the accumulated gains you SHOULD have in your account.

Your capital appreciation by now, should be about 1.5 to 2 times of what you had plough down then.

Of course Shit Ho, not having the midas touch on alot of occasions, would blame or rather deflect bad investments away. But by and large, taking only the winning she had gotten, the yield should still stand, although the capital appreciation might not be that much.

If I may say this with a straight face, you might even laugh at the measly sum of what is required as Min Sum now cos the returns, if they were really returned to you dumb asses, would be way way above that amount. Hell, you Sinkie could even have monthly payout while you are still putting in money into your pathetic account, while you are still contributing.

It is that much money that was made and still being made, with you dumb asses still thinking what the fuck had happened to your 'hard earned money'.

Of course, poor Roy being a young upstart could only chance upon data and figures he gleaned else where without knowing that if he had those $100,000 , with a good investment mind ( isn't Temasick and GIC having all the experts there?), he would have made those real gains and have them as facts now.

 

[davetan3]

what is a fair return? The world's best risk free asset is US treasury bonds

 

[davetan3]

I thought if CPF returns are deemed low, one can use the $$ to buy endowment funds, private pensions funds that promise higher returns?
These of course come with the risks.

 

[wwabbit]

Look here. Example is if I had invested, let's say $100,000 ( you could add another 4 zeros and change the first significant digit to anywere from 1 to 9 which GIC had done this) of your CPF money back in the 1990s.

The yield from these investment year on year would be not less than 12%.

This is just returned yield not even capital appreciation taken into account yet.

So, you must have taken full advantage of the CPFIS scheme right?
How much money did you make from that?

 

[wwabbit]

The mechanism that decides the increase of minimum sum for CPF is also opaque as well. We could have as high as a 10% increase in 2009 while for other years, an average of 5% - 6%. If both of these indicators are pegged to inflation rates, I do not see why they are not adjusted in tantrum.

On the contrary, the mechanism for the increase in minimum sum has been transparent.
http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach-55/Reach55-2.htm

In 2003, it was decided that the minimum sum will rise from $80k to $120k (2003 S$ before inflation) in 2013, at a rate of $4k per year before inflation. In 2011 however when the minimum sum was at $112k (2003 S$), a decision was made to spread the remaining $8k increase over 2 more years.

So for most years the minimum sum should be increasing by 3-4% plus inflation, which explains why in most years it's about 5-6%. 2008 saw a huge 6.5% inflation, that's why the minimum sum went up by 10% in 2009.

 

[winnipegjets]

On the contrary, the mechanism for the increase in minimum sum has been transparent.
http://mycpf.cpf.gov.sg/CPF/my-Cpf/reach-55/Reach55-2.htm

In 2003, it was decided that the minimum sum will rise from $80k to $120k (2003 S$ before inflation) in 2013, at a rate of $4k per year before inflation. In 2011 however when the minimum sum was at $112k (2003 S$), a decision was made to spread the remaining $8k increase over 2 more years.

So for most years the minimum sum should be increasing by 3-4% plus inflation, which explains why in most years it's about 5-6%. 2008 saw a huge 6.5% inflation, that's why the minimum sum went up by 10% in 2009.

And this is a good thing?????

 

[winnipegjets]

So, you must have taken full advantage of the CPFIS scheme right?
How much money did you make from that?

He invested US$1 million with David Tepper. His retirement fund is now worth more than US$149 million!

 

[soIsee]

So, you must have taken full advantage of the CPFIS scheme right?
How much money did you make from that?

I did not need to get myself caught in the HDB pigeon hole trap unlike most Sinkie. I used the Con People Fund solely to invest.

The gains?

Unbelieveable.

The yield? Saying it out you got to kill me.

So you see. Roy was telling the truth and got those liars so worked up that they need to stop him.

Smart guy Roy , too smart for his own good could even target a figure much much more than what is Min Sum ,if those real yield was return rightfully to the real owners of the fund.

I think many Sinkie also do know how to 'make good use' of their CPF and made good from it. Thank the PAP? Well, let me put it tbis way. If you got to dine with the wolves you got to be like one of them.

It is only the Sinkie loser that find why life is tough when their CPF seem not to be return to them and if it was, they are always at the loser end.