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7 Reasons Why Singapore’s CPF System is Broken as a Retirement Solution

Many CPF members feel cheated and have rightly blamed the PAP government for causing our retirement shortfall. The PAP must stop tweaking our unstable pension system to benefit businesses and channel more funds into GIC.

The PAP has hijacked our CPF for its political agenda and edited CPF’s mission at its whim. Our million-dollar ministers and civil servants still have not understood CPF members’ real concerns and may require a lot of assistance from opposition party members. Before we render the PAP such assistance, it is important to understand just how broken our CPF system has become under PAP’s total control.

1 Broken system confirmed by CEO’s perpetual silence

Our statutory boards are run like private companies with a CEO. During a crisis, the CEO fronts and defends the company or acknowledges and apologises for its errors. A CPF crisis of confidence has been gathering momentum with the PM having taken legal action against an unemployed blogger despite his apology. Hundreds of thousands of CPF members are up in arms over how our funds have been managed by CPF fund manager, GIC, being guaranteed low rate of returns for years, our retirement shortfall, arbitrary Minimum Sum (MS) schemes not only applicable to our OA but MA as well, etc.

Millions of words have been written on the CPF issue online but our CPF CEO has assumed he is entitled to silence, “one that is growing more deafening by the day”. There is is a disturbingly familiar pattern in the response from statutory board CEOs – be silent and hide behind PAP politicians. As far as members are concerned, such a CEO is useless.

By now, most of us are aware that our CPF system is broken because if it wasn’t, CPF CEO would have engaged its members with facts, figures and transparency.

2 CPF fund manager, GIC, has no mandate to manage CPF

GIC’s mandate is to “take calculated investment risks aimed at achieving good long-term returns on the Government’s funds”. Where is GIC’s mandate to help CPF members have a secure retirement? GIC is only responsible for the investment of “government’s funds”, or reserves, and our CPF obviously isn’t ‘government’s funds’. That is the reason why we receive mandated low rates which are of course not applicable to real government reserves.

3 CPF Board serves GIC, not CPF members

The CPF Board should have known years ago about our huge retirement shortfall. Instead of addressing the issue, it plays along with the PAP government and increased the MS to ridiculous levels where even more members could not meet the MS requirement. The Board was clearly sleeping on the job.

Instead of ensuring members earn sufficient returns for retirement, the CPF Board allowed the legislation of our CPF into government reserves to earn a mandated low rate of return. Ultimately, GIC benefits from such low rates at the expense of CPF members.

CPF members are expected to believe our rate of return is fair and allow GIC unfettered use of our CPF for long-term speculation at between 2.5% to 4%. Fact – GIC could never have raised $270,159,,200,000 ($270 billion) at such low rates for long term investments anywhere in the world.

4 GIC not suitable fund manager for retirement funds

GIC invests 100% in foreign assets. There are unpredictable forex risks and most GIC’s investments have suffered huge forex losses. Since almost all CPF members will retire in Singapore, would anyone invest 100% of his retirement fund in foreign assets? Has even a single scholar or minister invested 100% of his retirement fund in foreign assets? The answer is clearly ‘NO’ because funds would need to be converted into local currency at retirement.

If on a personal level, even an average intelligent person would not invest 100% of his retirement fund in foreign assets, why are CPF members mandated to do so via SSGS channeled into GIC? What is the PAP’s ulterior motive?

Most investments have suffered forex losses, some even wiping out capital gains,
eg. a 7-year investment resulted in 33% exchange rate loss


CPF members with a higher risk tolerance could accept increased risk for higher returns in foreign investments. But NOT 100%. Our neighbour’s EPF does not take excessive risk and has only 21% invested in foreign assets. No national pension fund invests 100% in foreign assets. This is common sense.

GIC should not be compared to other SWFs because they are investing budget surplus (reserves, not pseudo reserves like our CPF) or revenue from state resources. It is not a private pension fund.

5 GIC speculating to make up for past losses?

GIC should have been aware that it needs to earn a constant income to make regular payment to CPF members. This can be achieved by investing in stable businesses which pay regular dividends or in bonds. But judging from a number of GIC’s investments, it is unlikely to have sufficient income to pay CPF members, eg $11 billion in UBS paying half a per cent (CHF 0.25 divide by GIC’s conversion price of CHF 47.7), US$258 million in 3.2% 2020 notes from Tencent Holdings, etc.

With tens of billions of dollars in investments earning sub CPF rate, how does GIC propose to pay CPF members? If there other investments earning very high returns to make up for these and many investments that had been lost, why is GIC keeping mum?

It appears GIC has been forced to assume higher risks to make up for past losses and assets with low yields. It has been ‘investing’ in even more low yield stocks hoping for capital appreciation. This is speculation. Bets are also getting much bigger and likely points to a desperate attempt to make good past losses.

6 CPF members did not ask the PAP for guaranteed low CPF rates

CPF members have been shortchanged for decades. The PAP keeps harping on the government’s guarantee of low CPF rate when in fact no such guarantee exists. Government funds belong to citizens and how could citizens guarantee ourselves in the event of GIC’s failure?

It was the PAP which decided on guaranteed low CPF rates and the only beneficiary appears to be GIC.

7 CPF is a broken system

No matter how one looks at it, the CPF system is broken. This has been confirmed by the huge retirement shortfall experienced by a majority of CPF members. The various schemes such as CPF Life, MS, Medishield Life, etc exist to trap more CPF funds for the government to invest. Members continue to be shortchanged.

Any good scheme does need to be mandated by the government. Singaporeans are able to smell a good deal miles away.


Although there is a crisis of confidence in our CPF system, it has not even been acknowledged by the CEO. As far as members are concerned, a silent CEO reflects a broken system.

GIC does not have the mandate to invest for CPF members and therefore keeps the returns above the mandated CPF rate for the PAP government. The PAP should not expect to use tax dollars to guarantee GIC’s performance as it is a private limited company.

GIC is not a suitable fund manager for our CPF because it invests 100% in foreign assets. No potential retiree who intends to retire in Singapore will invest 100% in foreign assets. GIC also appears to be trying to make up for past losses with an increase in speculative investments.

The government is aware of the unhappiness of CPF members on not only the low CPF rate but the issue of transparency on how our funds have been invested. It has addressed neither.

The CPF system has been politicised to serve PAP’s political agenda, not CPF members’ interest. As such, the retirement shortfall issue will not be addressed by the PAP.

The CPF system is broken and since PAP has no intention of fixing it, CPF members should help ourselves by rendering the ‘right’ assistance.


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