The government has dedicated an entire article to dispel the “myths” that “Blogs such as The Heart Truths (that) have made allegations about our CPF monies” that the government claimed are “inaccurate or outright false”. Thank you. What an apt birthday present.
Let’s take a quick look at their “myths”. Let me opined on some questions. Also note this – what is not said is more important than what the government had chosen to say.
QUESTION 1: Should Our Retirement Funds Also Include Property?
The government claimed that Singaporeans’ retirement funds are not the least adequate in the world, because:
The uniqueness of our system is that you can also use your CPF monies to pay for housing.
The homes that we own are part of our retirement assets too, allowing us to save on rent while providing us with the option to sell our homes when we need to.
When international studies on pension systems make comparisons across countries, they often ignore this fact. They paint an incomplete picture of what members have in their accounts. They do not take into account the fact that Singaporeans also have used their CPF monies to pay for their homes.
Very nice phrasing they used there. So, let’s take a look at what is not said.
(1) If “Singaporeans … have used their CPF monies to pay for their homes” and thus do not have enough cash in the CPF by the time we want to retire, then where are we going to get the cash to retire on?
(2) If “The homes that we own are part of our retirement assets too,… with the option to sell our homes when we need to”, then when we sell the “homes” for retirement funds, where are we going to live?
(3) How many Singaporeans are actually able to use their CPF to buy their homes and then still have enough money to buy other basic necessities, and then be able to retire? Khaw Boon Wah had famously said that a Singaporean who earns $1,000 can still a afford a HDB flat. You can read what Alex Au had queried here.
(4) How many Singaporeans still have SPARE CASH in their CPF after using their CPF to buy the flats? In the CPF Board’s Annual Report, the government claimed that, “In 2012, 35,182 active CPF members turned 55, of which 48.7% were able to set aside their full Minimum Sum.” But do you know that the CPF Board’s definition of who is able to meet the CPF Minimum Sum includes those who are able to meet it “either fully in cash, or partly in cash and partly via a property pledge”?
So, for those who are able to meet the CPF Minimum Sum fully in cash, how many Singaporeans are able to do so? Mr Leong Sze Hian had estimated that nearly 90% of Singaporeans would not be able to do so.
So, since the government had come out with such a fanciful argument which doesn’t tell the complete picture, then let’s ask the government some questions to try to complete the picture which they had left hanging:
(1) How many Singaporeans have not been able to finance their home loans because they run out of cash or CPF?
(2) How many Singaporeans had to have their homes repossessed because they could not finance their home loans?
(3) How many Singaporeans are able to meet the CPF Minimum Sum entirely in cash?
(5) How many Singaporeans are not able to have enough spare cash to retire on and have had to resort to selling their homes?
(6) And let’s not forget, because the government has also made us use our CPF to pay for our medical bills, how many Singaporeans then do not have enough in their CPF/Medisave, and do not have enough cash, and are thus forced to sell their homes to pay for their medical bills?
Would The PAP Ministers Sell Their Homes To Retire?
Very fanciful story that the government had crafted but tell me this – for the PAP ministers who have bought their homes, would they buy into their own ridiculous logic that when they retire, they would also rely on selling their homes to generate cash for them to retire on?
Well, of course, in the first place, they would have already paid themselves well enough not to have to do that. They moreover earn millions of dollars. Also, by now, everyone is shocked by how rich Mah Bow Tan is. And who can forget ex-Member of Parliament (MP) Michael Lim’s sprawling mansion? MPs can also earn so much?
Now, I would like to see the PAP ministers be willing to sell off ALL their homes and be willing to “downgrade” into a cramped one-room flat. But I don’t even know how to make a fair comparison. How many homes do they have in the first place? And even after selling their homes, how many millions would they have left?
It’s quite honestly ridiculous that they expect us to retire on cash, and then on a home which we cannot otherwise eat on drink from, unless they had magically build a candy house like in Hansel and Gretel, then yes maybe, Singaporeans can live on cash and by eating our own homes.
Our Retirement Funds Are No Longer Our Retirement Funds
That the government would see it fit to ask Singaporeans to retire by selling our homes doesn’t just fly in the face of logic, but that they have the cheek to say that is complete obnoxious and highly irresponsible. In which country do you see the government tell its citizens – when you retire, I am going to give you a small little retirement allowance and if you need to, please sell your home to earn more.
And even if the government wants to claim that “international studies on pension systems … often ignore … the fact that … The homes that we own are part of our retirement assets too”, then let’s also compare how much citizens of the other countries have in cash, as well as including their properties. I’m not surprised if Singapore still has the least adequate “retirement funds” among the developed countries, when we include people’s “homes” as well.
There are so many ways to completely tear the government’s argument apart. In the first place, why did our retirement fund become something used for retirement, housing, healthcare, education and so many things else? Our retirement fund is supposed to be just that – our retirement fund. In other countries, the tax that we pay would be enough to give free healthcare and education – and as I’ve explained before, Singaporeans pay as much as the Nordic countries do already so we should also rightfully be able to receive free healthcare and education. Also, in other countries, we would be paid enough of a wage so that we can use our own voluntary savings to buy a flat and even when we take up a loan, be able to afford it. We wouldn’t need to rely on our retirement funds to purchase flats with jacked-up prices. We would be able to use our complete retirement funds to retire when we want to.
I don’t even know how to explain how the government’s explanation, or rather, excuse, is so wrong on so many levels.
The people’s retirement funds are our retirement funds. So just give it back. Please do not come out with a whole list of excuses and pretenses just because you don’t want to give it back to us.
If the only way for us to get our retirement funds back is to vote you out so that we can take it back, we will do so.
QUESTION 2: Why Does The Government Make Us Pay The Accrued Interest But Will Not Increase CPF Interest Rates?
I’ve also written previously about accrued interest, and the government had responded by saying:
it is only right that if we were to sell our home, we should return what we have borrowed (i.e. the principal amount) plus the interest we would have earned had the money not been taken out from our CPF account (accrued interest). This amount is returned to our own CPF accounts for our future retirement needs.
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.
Here’s what not said:
(1) Why is it “only right that if we were to sell my home, we should return what we have borrowed”? It’s our money in the first place, right? If we want to pay an interest, we will pay it. If we don’t want to, we won’t pay for it. Who decided it’s “only right”? Did the government ask Singaporeans?
(2) Also, the CPF Board also said that the “Accrued interest needs to be refunded … as long as the sales proceeds is sufficient to pay back the principal and interest”. How many Singaporeans actually earn enough profit to pay back the “accrued interest”? How many Singaporeans are able to pay back the “accrued interest” and still be able to make profit, if at all? If you understand this, when you earn a profit on the sale of the flat, do you really earn a profit? Do you think the government will let you earn that profit?
(3) My next point pertains to the CPF interest rate. If I don’t have enough inside my CPF, is it because I didn’t pay back the “accrued interest” or is it because I wasn’t paid a high interest by the government in the first place?
See if you can see this – when I pay an accrued interest, I have to use my cash in hand to pay for it. There’s no money earned – it goes from my pocket into “my” CPF. But when the government pays me a high(er) interest, this is additional cash coming into my CPF.
Accrued interest from myself = no extra money. Higher interest from government = extra money.
You see how they skid around their responsibility?
You see what the government is trying to do? It doesn’t want to pay you additional, so it makes you pay for yourself.
But let’s clarify further – let’s touch on the CPF interest rate.
QUESTION 3: Why Does The Government Use Our CPF To Invest But Not Give Us Back The Interest Earned?
The government claimed that:
There is no connection between GIC’s rate of return and the interest paid on our CPF accounts.
Very simple, then don’t use our CPF to invest in the GIC.
The government can obfuscate the issue but when India, Malaysia and Hong Kong all run similar provident fund systems and are able to generate returns of between an average of 6.5% to 9.5%, then something is very wrong when Singapore’s provident fund is only able to generate only 2.5% to 4%.
Perhaps the government would then like to explain this contradiction:
(1) Why does the government see it necessary to increase the CPF Minimum Sum to “maintain the real value” of the CPF Minimum Sum, but does not see it necessary to increase the CPF interest rates to “maintain the real value” of the CPF? The 2.5% to 4% is lower than inflation, which means that the real value of our CPF has actually not grown!
(2) So why the contradiction? If the real value of our CPF is not growing, then why does the government want us to pay more into the CPF Minimum Sum to “maintain the real value”? Doesn’t that mean the government is intentionally making it harder for us to meet the CPF Minimum Sum?
The government also claimed that, “GIC’s and Temasek’s returns supplement the annual Budget through their Net Investment Returns Contribution (NIRC), which amounted to $8.1 billion this fiscal year.”
Do you know that last year, the overall CPF balance had accumulated $253 billion? Do you know that $8.1 billion is only a puny 3% of the overall CPF balance? And how much of this actually directly benefitted us?
So, here are some questions:
(1) Last year, there was $253 billion in the overall CPF balance. Singaporeans only withdrew $14.8 billion, or 5.9%. Where did the rest of our 94.1% of our CPF disappear to?
(2) If the government sees it fit to allow us to withdraw only 5.9% and spend another 3% through the NIRC, then if the government has enough money, why didn’t the government return it to our CPF to allow Singaporeans to withdraw it?
(3) The government’s response still doesn’t answer the question – why is it that Singapore has now accumulated one of the largest pension funds – 8th – in the world but Singaporeans have the least adequate retirement funds in the world? Something is not right somewhere. There’s something they are not telling us.
(4) And then why has the 8th largest pension in the world help to earn the 8th and 9th largest sovereign wealth funds in the world (GIC and Temasek Holdings respectively), but Singaporeans have the least adequate pension in the world?
Do you see where the government’s logic is? Instead of giving you back higher returns for your CPF directly, the government tells you, don’t worry, we will give it back to you via NIRC. Is this what we had asked for?
Just Give Us One High Interest Rate On The Whole CPF Already
The government also said that:
Aside from the return on our Ordinary Account, Singaporeans enjoy higher interest rates on their other CPF accounts- 4% on our Special, Medisave and Retirement Accounts, and an additional 1% on their first $60,000 in all our accounts
Back to the same questions:
(1) The 2.5% is the lowest in the world. It’s even lower than inflation. The real value of our CPF gets eroded.
(2) The majority of our CPF goes into the Ordinary Account, which means that our CPF is mainly earning the lowest interest rate of 2.5% in the world. (3) The additional 1% applies to only the first $60,000. Should we fall on our knees and thank the government for this “gift”.
Let me tell you what – there was one time in the 1980s where our CPF was earning a straight 6.5%.
There wasn’t ridiculous things like splitting the CPF into the Ordinary Account which is made to earn a lower interest rate, then having another Special Account on another interest rate and there was no additional 1% on the first $60,000.
In the 1980s, there was just one CPF and we earned one interest on it. Simple as that.
Because in the 1980s, the 6.5% interest rate is higher than any of the current tactics by the PAP. There wasn’t a need to create fanciful categories or to have to create excuses like the government is doing now.
So, let me tell you what – just give us a straight interest rate on our WHOLE CPF.
The government likes to claim that the GIC “carry higher risks” and wants to shelter us. How magnanimous. For the record, the Temasek Holdings has been showing off about how they’ve been earning 16% and the GIC has been showing off about how they’ve been earning 6.5%. If they have such consistent performances, and the government was able to give high interest rates on our CPF in the 1980s and some parts of the 1990s but are then unable (or unwilling) to do so now, then quite obviously you can see that they logic doesn’t hold water.
QUESTION 4: If The Government Would Increase The CPF Minimum Sum To Maintain Its Real Value, Why Would The Government Not Increase Wages To Maintain The Value Of Our Wages?
The CPF Minimum Sum is one huge contradiction. The government claimed that:
The Minimum Sum(MS) is adjusted for inflation on an annual basis for each cohort.
Also, the government had claimed that the CPF Minimum Sum was increased to “maintain its real value”.
So, here is what it is:
(1) Do you know that if our wages were increased as fast as the CPF Minimum Sum from 1995, the minimum that anyone would earn in Singapore would be $3,200?
(2) Even if our wages had grown with inflation, the minimum that anyone would be paid today would be $2,100.
But as it is, the government is only willing to give a “minimum” wage of $1,000 for low-income Singaporeans and 30% to 40% of Singaporeans still earn less than $2,000 today.
So, if the government truly wants to “ensure that our nest egg is spread out comfortably to last us not just for one or two years after retirement, but throughout our golden years,” then why would the government not want to increase our wages and the CPF interest rates to also keep pace with inflation?
If the government is not willing to increase wages and the CPF interest rates to “maintain their real value” but would only increase the CPF Minimum Sum to “maintain its real value”, then you know something is going on.
Wanting to allow us to retire comfortably “throughout our golden years” is a very bold claim when the HSBC The Future of Retirement Life after work? report had shown that Singaporeans savings are only expected to last us for 9 years, and note that of the savings, only 21% is expected to come from the state pension(s)/benefits. So is your CPF adequate?
Can you see how hypocritical the PAP is?
Exposing The Contradictions And Truths About The CPF
Put simply, there are many ways to tear the PAP’s argument apart. Do you know why? It is because there are many things the PAP is not telling and is hiding.
8th largest CPF retirement funds in the world. Least adequate CPF retirement funds.
Up to 16% earned using our CPF but only 2.5% returned.
Well, what do they want to hide? What are they keeping from us? Our money?
When you look at things from as clear and straight a picture as you can, then whatever logical leaps, fallacies and confusions that the PAP tries to create can all be seen through clearly.
Really? Retirement funds which include selling your home? If all the other countries understand retirement funds to be simply actual cash that you have in your retirement funds and Singapore is the only country that wants to define it differently by including property, then either something is very wrong with all the other 200 countries and governments in the world or the Singapore PAP government is pulling a really fast one.
As someone on my Facebook had remarked:
A quick calculation on the back of the envelope will tell you that with the new minimum sum, one would need to earn $3600 per month for an uninterrupted period of 30 years before seeing anything from your CPF at the age of 55. What is the percentile of people earning $3600 per month in Singapore?
(I haven’t looked at the calculations but I presume $3,600 includes for meeting the CPF Minimum Sum fully in cash, after purchasing a flat.)
Do you think the government knows this? Of course they’ve calculated and known this. Then why would the government still do it?
If the government would still increase the CPF Minimum Sum knowing that you would need to earn $3,600 every month in order to be able to meet it but would not increase your wages, then you know this government has a very insidious agenda and it has nothing to do with taking care of you.
And do you know that about 60% of Singaporeans earn less than $3,600 every month?
To put it very simply, if you earn the lowest $800 today (and even 15 years ago), about $300 would go into your CPF every month. And if you earn the median income of about $3,000, about $1,000 would go into your CPF every month. Do you know that the lowest CPF monthly payout for when you retire today is $350 and most Singaporeans would receive this amount. Can you imagine putting $300 to $1,000 every month and only getting $350 back monthly when you retire? Imagine you would have been working for 40 years and would most probably spend about another 15 years in retirement. What happened to all those interest earned? If you are getting lesser every month than what you had put in every month and you’ve put all the money in for 40 years but take even lesser out in 15 years, then where did all the money go?
Maybe let me ask one more thing – is the CPF a tax? If you understand how they’ve artificially jacked up the housing price to extract even more out of your CPF, then pay you a low interest into your CPF so that your earnings are not returned, you will understand how all the money that’s been forcefully taken away from you is actually a tax that you are paying.
What happened to our retirement funds? Do you see how wrong this is on many levels? What the PAP is PAP doing with our retirement funds?
How To Clean Up The CPF?
But what should we do with the CPF then, you ask? Very simple:
(1) Increase wages so that CPF contributions will increase to increase individual CPF contributions.
(2) Increase the CPF interest rate so that the individual CPF balance will increase – one high interest rate for the whole CPF.
(3) With increased interest rates, CPF payouts will increase.
It’s actually very simple. There’s no need to create the Ordinary Account, Special and Medisave Account, CPF Minimum Sum, Medisave Minimum Sum, Medisave Contribution Ceiling, additional 1% for first $60,000 and so on and so forth. All these are meant to confuse and complicate, so that in all that confusion, we accept what we are given. And so, we accept the ridiculously low $350 every month.
You know, we’ve begged them for long enough. For Singaporeans older than I am, they would remember that we’ve been begging the government to take care of Singaporeans for more than the past 10 years.
That the government still has the audacity to come out with something as hypocritical, contradictory and two-faced, just so that they can hide their secret agenda, is disgusting and downright despicable. Can you imagine how in the face of strong public anger and resistance, that the government still has the thickness of the skin to continue to want to contort the truth for their own benefits?
Finally, there’s still one very important question left unanswered – why has the PAP put themselves in the government and the GIC and can claim that they do not know how our CPF is being used by the GIC? What are they trying to hide?
But do you know why they are defending their version of the CPF so relentlessly. The CPF is the crux for which their whole entrapment plan against Singaporeans lie. Once the truth about the CPF is clearly exposed and open for all the see, their whole pack of cards fall. And so they will fight tooth and nail to discredit this blog.
Of course, there are those affiliated to the PAP who pursues that I am the one who is contorting the truth.
Well, the information is all out there. I know that at night, I can sleep well, knowing I have acted with my conscience clear. I will leave it for Singaporeans to mull over it. But when we are ready, it’s time to stand up to fight for our freedoms and to protect ourselves.
Aside, I do pity the copywriters of the government’s article. I cannot imagine what they must have had to put through to create the article, knowing how much they would have had to self-censor themselves from the truth.