PAP govt should take a leaf out of EPF’s book since it cannot resolve retirement issue

CPF historical rates, EPF historical dividend rates

In my previous post, I highlighted the huge difference between the returns of EPF and CPF (5.91% vs 3.56% compounded interest) during the last 20 years. Not only were EPF returns higher every yearduring the last 20 years, CPF rates have never been higher than EPF rates since 1955.

Something is seriously wrong with our CPF pension system when a neighbouring country has been able to achieve satisfactory returns for their citizens’ retirement for more than 5 decades. If it had not, rest assured there would be regular mass protests by tens of thousands of Malaysians, not at a designated park, but in the capital.

CPF protests at Hong Lim Park are due to the PAP government’s use of legislation to keep a huge portion of our CPF returns in GIC and to supplement the budget.

The PAP has refused to address its own shortcomings but prefers to ‘fix’ those activists who have the support of most CPF members. It has again resorted to bullying tactics using taxpayer-funded civil servants to achieve its political objective. This has continued to erode the trust of Singaporeans.

Further comparisons with Malaysia’s EPF will confirm the incompetence of our government in looking after the retirement needs of citizens.

Exchange rate – S$1 = RM$ 2.55
For CPF $9.14 billion payout see MAS Annual Report page 111

The PAP government has been telling Singaporeans that our CPF cannot be invested as a standalone fund and that we need the support of government reserves in order to achieve guaranteed VERY LOW returns.

But Malaysia’s EPF:
– is a standalone fund and not commingled with government reserves to confuse its members,
– has achieved satisfactory returns for its members for more than half a century,
– has never provided returns that are lower than CPF rates since 1955,
– does not need the government to guarantee its returns at the expense of taxpayers.

If the PAP wants to regain citizens’ trust, it must cease assuming CPF members are dumb and be upfront and transparent when dealing with us.

From the (above) table, CPF has clearly underperformed by miles ie it manages $23 billion more than EPF but paid out to CPF members $3 billion less than EPF. Is this considered a stellar performance?

Since GIC’s inception, CPF rates have been a disgrace to the PAP government when compared with EPF’s.

If the PAP had modelled our CPF on the EPF, Singaporeans would have received much higher returns for our retirement.

EPF’s compounded interest rate since 1981 is 7.02% vs CPF’s 5%. The 2% is significant over the long term ie $10,000 invested in EPF would have earned $77,782 in 2013 whereas CPF only $37,653 **