Roy Ngerng: PAP Continues to Whitewash the Truth about the CPF

The Straits Times carried an article on the so-called “changes” to the CPF today. Let me explain how the PAP is trying to whitewash you, with a point-by-point rebuttal.

(1) The PAP now claims that $650 to $700 is what they have calculated to be what lower-middle income Singaporeans need to retire on. Do you remember that just last year, the PAP kept saying that what they have calculated to be enough for lower-middle income Singaporeans is actually $1,200? So, why did the PAP suddenly change its stance? Now, they add in the caveat that “It assumes you own a home and do not pay rent.” The PAP has never said this before.

Now, even if this holds through, just think for a minute – how can $650 to $700 a month possibly be enough for anyone to use on a monthly basis, after you factor in for food, transport, public utilities bills etc? $650 to $700 is not even enough for a low-income family, let alone a lower-middle income family.

What trickery is the PAP trying to employ? Simple. Previously, the PAP came out with the “CPF Minimum Sum” of a $1,200 payout. When they needed to “justify” this $1,200, they tried to say that this is what they have “calculated” would be enough for lower-middle income families. But now that they have changed the name of the “CPF Minimum Sum” and introduced the “Basic Retirement Sum” with a payout of $650 to $700, they are trying to “justify” this again, so they came out with this erroneous excuse again.

But really, what is the actual way to calculate what is enough for each Singaporean to use? Well, define a poverty line and a minimum wage. But you see, the PAP has refused to do both of these. What a responsible government would do is to look at what a person in Singapore would need to use and spend on for basic necessities on a monthly basis, then factor in any other additional expenses the person might need. Accordingly, the government should then calculate how much this basket of goods would cost and set a poverty line, and then a minimum wage to that level. You can try doing this calculation for yourself. I have tried doing this in 2013 and my estimates are that the least that any Singaporean would need to earn on a monthly basis is $1,500 to $2,000 to survive in Singapore.

So, why does the PAP say that $650 to $700 is enough? Where are their calculations? How did they derive $650 to $700? Ask them to show us their calculations, if there is even any, and I can assure you we will be shocked by it. You will laugh at it.

(2) So, the PAP finally admits that the CPF Minimum Sum between July 2013 and July 2015 has gone up by as high as 10.4%. Why is there even a need to increase the CPF by 10.4% in one year? Has the PAP ever explained how they increased the CPF Minimum Sum? Previous explanations have relied on how the CPF Minimum Sum was also adjusted according to inflation but in which year did we see a 10.4% increase in inflation?

Not only that, do you know that in 2008, the PAP lost more than $100 billion – billions, mind you – from GIC and Temasek Holdings. It was also in 2008 that the CPF Minimum Sum was suddenly spiked up by 10.4%. A coincidence? You decide for yourself. Yet all this while, the PAP claims that that the spike in the CPF Minimum Sum is never to make up for the losses that the GIC and Temasek Holdings had made. You believe?

Yet, the PAP would increase the CPF Minimum Sum by as high as 10.4%, knowing that Singaporeans’ wages never increased by that much. In fact, our real wages have remained stagnant or even dropped for the past 20 years. Also, the CPF interest rates remained at a low of 2.5% to 4% – or the lowest among the pension funds in the world. This means that our wages and the CPF interest rates were growing much slower than the CPF Minimum Sum. How then would anyone be able to meet the CPF Minimum Sum when the real value of our CPF pretty much could not grow?

Effectively, the way that the PAP was increasing the CPF Minimum Sum meant that more and more Singaporeans would not be able to meet it and would have our CPF trapped inside.

(3) The PAP is now saying that the “Basic Retirement Sum” (renamed from the CPF Minimum Sum) rises so as to “keep pace with inflation”.

Let me tell you why this does not make sense. So what if the Basic Retirement Sum or the CPF Minimum Sum rises with inflation? Will your CPF increase? No, it will not. Then, what does the rise in the Retirement Sum do? It only means that more of your CPF will be trapped inside.

You see, if a responsible government really wants to help Singaporeans to save more, what would it do? It would ensure that it is the CPF “payouts”, or rather, our CPF itself, which keeps pace with inflation. It does not matter how the Retirement Sum keeps pace with inflation when our wages do not grow and the CPF interest rates do not grow – then our CPF will not grow, and the payouts will not grow.

Then, what game is the PAP playing? Well, the PAP is saying that since Singaporeans keep asking for their CPF to increase with inflation, right? They are not interested to help you do that. But they know that if they mention something somewhere about “inflation” they can pretend that they are doing something, so that talk about how the Retirement Sum is keeping pace with inflation. It’s a sham.

(4) The PAP is now saying that the CPF is invested in special Singapore Government Securities, but now they stopped short of mentioning that they actually take it to invest in the GIC, again.

Do you remember that in 2001 and 2006, Lee Kuan Yew denied that the CPF is invested in the GIC and in 2007, Ng Eng Hen also denied it? Then do you remember that after the PAP sued me last year, they were forced to reveal that the CPF was indeed invested in the GIC?

Is the PAP backpedalling now? Are they trying to make Singaporeans forget that they ever said that? Are they trying to make Singaporeans forget that the CPF is invested in the GIC, by not mentioning it anymore? Do they really believe that Singaporeans have such short term memories or that we will believe in their propaganda?

Do you know why the PAP does not want you to remember that the CPF is invested in the GIC? This is because the GIC earns an estimated annualised returns of 6% every year. Meanwhile, the PAP takes our CPF to invest in the GIC but returns only 2.5% to 4% to our CPF. This means that Singaporeans are losing as much as half of what we should be getting back on our CPF, because the PAP has siphoned it off.

Not only that, the PAP denies that the CPF is invested in the Temasek Holdings but do you know that since the 1970s, the PAP has been giving our CPF monies to Temasek Holdings to invest? Today, Temasek Holdings earn annualised returns of 16% every year. Do you know how much Singaporeans are losing from the money that is not returned to our CPF?

Now, do you know why so many of our elderly Singaporeans are unable to save enough inside their CPF to retire? Now, do you know why the PAP wants Singaporeans to forget that the CPF is invested in the GIC and Temasek Holdings? They want to keep taking your money to earn.

(5) So, the PAP is now saying that you can set aside between $40,000 and $241,500 inside your CPF. Where did the $40,000 suddenly appear from? It is not the Basic Retirement Sum, neither is it the Full Retirement Sum or the Enhanced Retirement Sum.

Plus, there are many things that are amiss. Some commenters have already pointed out that last year, when the CPF Minimum Sum was $151,000, Singaporeans were told that they would receive a payout of $1,200. Now that the CPF Minimum Sum has been renamed as the “Full Retirement Sum” and is increased to $161,000, then why is that Singaporeans are still going to receive only a payout of $1,200? Did the PAP eat our money?

Not only that, do you know that half of Singaporeans actually have less than $55,000 inside their CPF in cash? This means that half of Singaporeans will only be able to receive less than $400 in payouts every month.

Then what’s with all these fanciful “Retirement Sums” and the so-called payouts of $650, $1,200 or $1,750 that Singaporeans can receive? The fact of the matter is that the majority of Singaporeans won’t even be able to get $650 in monthly payouts.

Do you remember that Tan Chuan-Jin said last year that the PAP would look into how to let Singaporeans know information about how much we have inside our CPF etc? Where is this information? The PAP conveniently forgot about it. Why? If the PAP has to let you know how much Singaporeans have in cash inside our CPF, their whole CPF Minimum Sum or “Retirement Sum”, whatever they want to call it or rename it to be, will fall apart.

You see, once they reveal this information, it will be revealed that three quarters of Singaporeans won’t even be able to meet the new “Basic Retirement Sum”. Then, what’s the point to all these “Sums” and so-called “enhancements” to the CPF? Nothing. The PAP never wanted to increase your CPF at all. They only want to be trap your CPF inside for their own use.

As I have mentioned countless times, if a responsible government wants to increase your CPF, what would it do? It will increase your wages, the CPF interest rates and reduce housing prices, so that your CPF will grow.