50 years of independence and CPF
Arguably, Singapore’s most outstanding and unique economic policy achievement in its 50 years of independence is our CPF system.
CPF managed by GIC?
Why is it that whilst it was only disclosed in Parliament on 8 July last year, that our CPF funds have been managed by the GIC – wheareas a former Manpower Minister replied in Parliament in 2007 that the GIC does not manage CPF funds, and a late former Prime Minister also said that there is no link between the GIC and CPF funds?
1983 – GIC $2m, Temasek $223m
According to a Parliamentary reply on 23 July, 1985, the paid-up capital of the Government Investment Corporation of Singapore (Pte) Ltd and Temasek Holdings (Pte) Ltd in FY83, was $2 million and $233 million respectively.
Their net profits for FY83 was $226 million and $1.4 million, respectively.
CPF from 1955, Temasek from 1974, GIC from 1981
Since CPF started in 1955, and by 1982 – 172,735 members withdrew a total of $854.6 million for the various housing schemes – how can we say that our CPF funds have been managed by the GIC when the GIC was only formed in 1981, whereasTemasek was incorporated in 1974?
1983 – CPF interest 6.5%, contribution 46%
By the way, the CPF interest rate in 1983 was 6.5 per cent, and the contribution rate was 46 per cent.
CPF managed by GIC?
And since GIC’s paid-up capital was only $2 million in FY83 compared to Temasek’s $233 million – does it mean that some if not most of Temasek’s funds may have been derived from CPF?
GIC's annualised returns for the last 20 years is 5.2 per cent in.S$ terms, but its returns from inception has never been disclosed. Temasek's return is 16 per cent per annum from its inception.
We get only 2.5 per cent in the Ordinary Account since 1999. The extra one per cent on the first $60,000 and first $30,000 from age 55, has to be seen in the context that the higher interest on our Medisave may be money which we may never use as disposable income.
The higher interest on the Special and Retirement Accounts may also in reality only come back to us in our very advanced years in the sense that we will exhaust our money before receiving the higher interest accumulated last, from a cashflow perspective.
Similarly, the extra one per cent on up to $20,000 of our Ordinary Account is credited to the Special Account.
Win battles lose war
TRS Contributor