It's a flawed argument.
The CPF funds is a ring fenced pool of funds which belongs to its members. It central purpose is to provide for its members when they retire.
All such ring fenced provident and pension funds around the world do not put their money in bank fixed deposit and wait. The funds are managed professionally in-house or by an outsourced fund management company governed by a board that serves its members and to ensure the best possible returns with minimal risk.
If CPF is benchmarked against these similar funds (their peers) they would be at the bottom. It the same reason why the Govt has refused to benchmark CPF till today.
For the first 18 years when Singapore and Malaysia together with Brunei had their respective currencies made interchangeable and were at parity, the EPF paid more returns than CPF.
Hri Kumar used the same bank argument because he knew his voters were ignorant of the world and it's practices when it came to pension funds. He also knew that the Straits Times will never do a comparison of returns with other similar funds if it shows the government in unfavourable light.
The CPF pays annual interest higher than local banks. No argument. When CPF lends to GIC/TH at agreed annual fixed or floating interest rate, GIC/TH are free to on-lend to third parties or invest the funds at whatever returns beneficial to them. If they can get 18% pa on the returns, so be it but why should they pass back that 18% to CPF? It does not make sense.