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Watching People Get CPF Wrong

Much of what I come across in our papers and online including nameplate analysts and economists about the CPF is at best partially correct. The folks at GIC would know this well. People don’t realize that any commitment to guarantee higher returns will likely start to pile on risk of loss faster than the additional returns sought given the investment skill and experience we have.

I had mentioned in this blog a few times that our CPF is better than almost any other system out there but unfortunately the best has also turned out to be not good enough.

I am fairly sure the writer didn’t understand Lawrence Wong in layman speak what it actually meant that an equivalent US TIPS product would be too costly for us. Besides in many countries they also mug around with their inflation numbers so that the returns from such products are actually less than meaningful inflation.


I read Prof Benedict Koh article on Friday. His ideas are sound on paper but not practical in real life today. However they are completely reasonable may be about 20 years and earlier ago. The environment has changed and the theories have not caught up. The Fed money printing had caused many complacent analysts to wake up and understand what’s happening. We are living in an environment which is indeed really hard to obtain returns better than inflation.

People also and I don’t blame them missed that the present way our CPF is managed is helping us avoid a worse outcome. They don’t realize that their CPF money is not stolen but together with the gains from government surpluses invested with half of these gains used to fund the budget. Now if the government were to up the returns for each CPF account holder then there would be less money available for social and other spending. But this is not the big point. What would hit harder is that the rich will benefit more from higher returns than the poor simply because they have more money in CPF.

The CPF is about the best system we could come up with and is much admired internationally. It is just terribly unfortunate that the global financial environment has for now and the foreseeable future made it impossible to be good enough for our needs. In other words, people should seriously think of working for as long as possible. And who should be blamed for this? He is none other than Uncle Sam and his cronies. Now if we do not have Uncle Sam, do we want China to takes its place? We would all be worse off.

America understood that a prosperous and strong China is good for America but I wonder if China also appreciate that she will always be better off with a strong and prosperous America. If the Chinese do not grasp this fact, all bets are off and our CPF would hardly matter. How do we tell people not to sweat the small stuff? LKY knew how to persuade his generation on such matters but we have no interlocutor like him for this generation.

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This article is courtesy of PengYou at Blogging for Myself. The original article can be found here.


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