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CPF not gone – PAP govt just wants to control you!

makapaaa

Alfrescian (Inf)
Asset
http://www.tremeritus.com/2015/08/16/cpf-not-gone-pap-govt-just-wants-to-control-you/

[h=2]CPF not gone – PAP govt just wants to control you![/h]

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August 16th, 2015 |
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Author: Contributions



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This
is from TRE reader never trust pap !!!


Chris Kuan – hi bro, no offence. We are older folks not much theory
savvy, but we do believe straightforward is always more correct than beating
around the bush…………… Assuming, as you mentioned, govt’s Statement of Assets and
Liabilities is correct, can you advise whether PAP government is able to repay
S$161k + S$40.5k to each batch of citizens at 55? Serious question. Can PAP
government repay, having looked at the govt’s Statement of Assets and
Liabilities? Look forward to your answer. Thanks.

The writer takes no offense whatsoever. Many are confused about the social
media allegations that CPF cannot be repaid in its entirety because GIC has
squandered away the monies in bad investments.

A straightforward explanation is indeed always the best. So the writer makes
a simple explanation of the assets and liabilities of the government. In so
doing, the “undisclosed” reserves managed by GIC will also be shown (try to spot
it). Those convinced government financial statements are complete fabrications
should look away.

Statement of Assets and Liabilities

The Statement of Assets and Liabilities is an appendix to the Budget
financial information package (and would have been delivered to the IMF). The
crucial line items are under Liabilities – the Government Securities Fund and
the General Balance.

Capture34.jpg


The Government has $834b of financial assets (excluding assets held by Fifth
Schedule entities such as MAS and Temasek, GIC holds no assets) and this is
managed by GIC. However the entire amount is not the reserves.

Liabilities are what the government owed to government bond holders and to
various Funds and Endowments in which spending commitments from the budgets are
not yet disbursed, therefore continued to be held by the government and
invested.

The line item Government Securities Funds denotes the government’s obligation
to bond holders. This shows $401b provision, i.e. set aside, for debt of which
$260b are Special SGS invested by CPF.

The line item General Balance is the difference between total assets and
total commitments, i.e. the above-mentioned funds, endowments and the obligation
to debt holders. This is recorded under the Consolidated Fund which, according
to the Parliamentary Glossary is analogous to a “bank account” where revenues
are paid in, expenditures are paid out and the balance of $254b reflects the
excess monies. That is to say the government has more assets than its
commitments by $254b.

Not only is the $401b owed
by the government to bond holders (who include CPF) already set aside and backed
by assets, but the government has $254b more assets than what it
owes.


So to answer @ never trust pap !!, government is much more than able to repay
S$161k + S$40.5k to each batch of citizens at 55.

The Spending Wayang

$154b of liabilities are commitments to Funds (e.g. Development Fund) and
Endowments (e.g. Edusave, Comcare). This shows expenditures in the budget
especially those targeted at social transfers, are not the same as actual
disbursements because disbursements are staggered over a long period of time or
only the returns in Endowments are spent. This explains the vast difference
between the expenditures announced by the government and the actual
disbursements given to recipients.

Finance the weapon of choice

The allegations that GIC has squandered away CPF monies do not hold up to
minimum scrutiny of simple portfolio-level analysis anyway. This shows GIC is a
conservative asset manager whose risk-adjusted performance is exactly on par
with Norway’s GPF. It is implausible that our CPF is all squandered.

That the government refused to repay CPF in full at the age 55, has always
had little to do with investments but everything to do with politics:


Minimal expenditures on social spending and social transfers, e.g. pensions,
healthcare;

Maximum accumulation of reserves whose returns provide total flexibility in
ad hoc, discretionary spending;

Minimum interference from fiscal trade-offs, e.g. no pressure from mandatory
social entitlements to balance other expenditures such as defence; and

Maximum leverage over voters by depleting their CPF and in their old age
handing out social spending in drips and drabs.


In the political battlefield, finance is the ultimate weapon. Non-prejudicial
access to information would have allowed knowledgeable opposition parties to
precisely craft more citizen-friendly socioeconomic policies that provide voters
with an alternative. Vote wisely if one wishes the government’s riches to serve
the citizens than to pay for weapons, vanity projects and obscene minister and
civil servant salaries.

Chris
Kuan


* Chris was regional head of capital markets
for Asia Pacific until his retirement. He writes opinions and commentaries
mostly on economic and financial matters.
 
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