The CPF Minimum Sum (MS) has been increased to $198,500 with effect from 1 July 2014. (MS must also include Medisave Account) The PAP government claims it is for a our “secure retirement”. However, the manner in which it channels billions of our CPF into the GIC for ‘investments’ is certainly a cause for concern.
1 Minister Lim Swee Say has already confirmed “many investments had been lost during the global financial crisis”. The government should be upfront with CPF members on the exact amount lost. I am sure Minister Lim has the figures and was unlikely to be speculating. Is it $10 billion, $20 billion or $50 billion? If GIC is still performing well, it should have investments which more than made up for these huge losses. Please list them.
2 Placing our CPF in the GIC is WRONG. Why? According to the GIC, its “aim is to achieve good long-term returns for the Government”. CPF monies do not belong to the Government, they belong to CPF members. Since when are CPF members obligated to help achieve long term returns for the Government?
3 CPF monies belong to individual members but the Government issues SSGS to the CPF Board and then transfers the money into GIC. The government does so to hide the ownership status and by the ‘legislated conversion’ in government reserves, the monies effectively belong to the government.
In MOF’s answer to “Who manages our reserves?”, MOF stated “The Government’s assets are mainly managed by GIC Private Limited”.
Since when did CPF members allow our savings to be converted to “Government’s assets”?
4 It is also wrong for the Government to guarantee CPF members’ returns for the obvious reason that GIC is a professional fund manager. The Government cannot use tax dollars, and penalise taxpayers, to guarantee CPF members in the event of the failure of a private fund manager.
5 GIC’s sister company, Temasek Holdings, has been more transparent and has even listed its major investments, as well as other relevant data, on its website. link Why does GIC not even list a single investment?
Temasek Holdings major investments in the financial sector.
6 Even all the stocks of Warren Buffet, legendary investor, are known to the public through the Securities and Exchange Commission filings. The possible reasons for GIC not to disclose its holdings are:
- it is covering up huge unrealised losses,
- its good investments are not able to make up for those which have incurred huge losses,
- it tries to prevent the revelation of many lost investment during the financial crisis. (as confirmed by Minister Lim)
7 There is evidence that GIC is probably the biggest punter and a yield seeker. After committing about$25 billion of CPF monies in UBS and Citigroup, Tony Tan, then deputy chairman of GIC, in a way acknowledged the bad investments and said that CPF funds may be stuck with peanuts returns for “many years”. In other words, investing is like ‘tikam-tikam’. Bad investments can be simply put in the ‘cold storage’ without any accountability. Why do we need to pay millions for such fun(d) managers?
8 Bloomberg reported that then chairman of UBS had called then GIC CIO, Ng Kok Song, on “Dec 6 2007 and by the evening of Dec. 9, GIC had committed to make its biggest single purchase at the time”. Imagine placing a $14 billion bet in 3 days! Can anyone really trust an organisation which does not bother about due diligence when investing such an astronomical amount?
According to the MOF, “GIC is a fairly conservative investor”. ???
9 GIC’s “Newsroom” is basically a joke like no others. Since 2009, GIC has announced only 14 transactions. It appears to be selective in its announcements where transactions such as selling more than $300 million worth of shares in Bunge Ltd is not considered newsworthy. However, “Winners of the GIC essay prize” is considered news.
| YEAR | BUY | SELL | OTHERS |
| 2014 | 8 | 0 | 2 |
| 2013 | 4 | 0 | 7 |
| 2012 | 0 | 0 | 3 |
| 2011 | 0 | 0 | 11 |
| 2010 | 0 | 1 | 7 |
| 2009 | 0 | 1 | 10 |
| TOTAL | 12 | 2 | 40 |
With so few transactions, how does GIC generate returns to pay CPF members? If GIC really has nothing to hide, why does it continue to be opaque?
10 I will never trust the PAP government until transparency is improved. If the PAP government is still uncertain on how to go about it, I would suggest it follows the Norwegian model. I am sure all CPF members would agree on this. Take a look at a complete list of Norway’s equities,fixed income and real estate. The ‘reason’ for GIC’s opacity is an insult to any guy with average intelligence. CPF members must know they have the right to transparency.
Phillip Ang
*The writer blogs at http://likedatosocanmeh.wordpress.com/