Why can't we ask the whereabouts of our CPF savings? Is it so
wrong to insist government show us what it is doing with
OUR MONEY ?
And why is GIC so afraid to reveal the sums? Government's
explaination ("afraid of financial sabotage...) is so
stupid even a fool won't believe it!
Should'nt CPF board show the account books and assure Singaporeans
that their CPF savings are in safe hands - or properly
invested?
Who should be held accountable if GIC invest CPF money and lost
heavily?
Will we ever know about such bad investments that went very
wrong?
x x x x x x x x
Academic warns Singapore must overhaul CPF..
By Jame DiBiasio 06 September 2000
" Tinkering with the Central Provident Fund's parameters won't be
enough to meet Singapore's social security goals.
The Singaporean government must stop its implicit taxation of its
citizens through the Central Provident Fund (CPF) and give more
weight to its fiduciary responsibility to them if Singapore is to
sufficiently provide for its aged, says Mukul Asher, professor of
public policy at National University of Singapore. He estimates
that by 1998, the average balance members could withdraw upon
retirement had declined to the equivalent of a mere 10 months'
wages.
The table below illustrates this problem. Asher
calculates the average monthly wage for a Singaporean, both
including the CPF contribution and without, and the estimated lump
sum that members will withdraw from CPF upon retirement. The
problem is especially acute for women: Asher's numbers are a median
between the higher salaries of men and the lower salaries of women.
Considering Singapore has been a high-growth economy for decades,
the numbers are alarming.
For table please Refer:
http://www.sfdonline.org/Link%20Pages/Link%20Folders/Political%20Freedom/financea060900.html
CPF funds are invested by the Singapore government through vehicles
such as the Singapore Government Investment Corp. (SGIC), Asher
believes. The government does not say how CPF funds are invested,
on what criteria or what returns they achieve. Although many
observers have guessed the government invests CPF funds directly
into infrastructure and public housing, Asher says the numbers
don't support this view: it has persistently run large budget
surpluses. That has led him to suspect CPF funds are largely
invested offshore.
The professor cites anonymous SGIC executives as saying it aims for
an inflation-adjusted annual return of 3-4% in Singapore dollar
terms. He assumes if a 3.5% annual return was achieved from 1987 to
1999, when the average actual return to CPF members was 0.88%, then
Singaporean citizens are being implicitly taxed the remaining 2.62%
return, or S$2.3 billion ($1.4 billion) -- the equivalent of 20.9%
of corporate and personal income tax revenue in 1999.
Government officials accept the need for change, Asher says. But so
far the options they have floated, such as raising contribution
rates allowed in accounts with higher interest rates or increasing
the withdrawal age, are going to have only a minimum impact. The
additional contributions required by individuals to sustain a
monthly income in retirement of two-thirds their working salary are
so high as to be unrealistic. "Unless [the government] is willing
to end the implicit taxation of CPF wealth, and unless it increases
the weight given to its fiduciary responsibility to its members,
the progress towards providing the adequate replacement rate will
be limited," he says.
He calls for more
public accountability for how CPF funds are invested and their
returns, and for allowing CPF members to choose among allocations
of varying risk. Individual annuity markets or
similar options must also be developed. Asher will present his
findings in Rayong, Thailand at a seminar sponsored by the World
Bank and Thailand's Ministry of Finance later this month.
