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Facts You did not know about CPF
The whole purpose of a retirement scheme is so that an individual can save a sum of money in the present while he/she is employed, so that this saved amount can be used to fund retirement expenses when they have no or a lower income. If someone sets aside a sum of money for retirement, but dips into it every month to pay for rent, or electricity bills, or car payments, than there is really no retirement fund available for this person when it comes time to retire. This is exactly what is happening with CPF. Individuals are allowed to dip into it for housing down payments, and then for monthly mortgage payments after that. That leaves them with little CPF money when they come towards their retirement. And what is worse, by imposing minimum sum requirements, even this smaller amount of CPF cannot be withdrawn unless the minimum sum met.
Bearing this in mind, here are some interesting facts from last CPF statements available in Dec 2012:
1) CPF contributions for 2012 was $24.7 billion, but withdrawals were $11.7 billion!! The withdrawal is about half of the contribution. How can you save for your retirement when you take out $5 out of every $10 you put in? But wait, you say, how can this be? The % of S’pore population over 65 is only 10%. How can they have so much CPF as to withdraw $11.7 billion a year?
2) Well, it turns out that $5.7 billion was withdrawn to fund HDB down payments and monthly mortgage payments, as well $2.3 billion was withdrawn to fund to private housing DP and payments. The serious issue here is that the PAP has deliberately overpriced the value of a flat by at least 300%, meaning that the savings have been siphoned off to pay for overpriced housing. Even worse, these flats are nothing more than 99 years pre-paid rent. Hence the $5.7 billion is going into the govt. with no benefit to the people. Some fools will say, wait, I can sell my flat for money and retire. Let me ask you if you stayed in your flat for 40 years, how much can sell it for, when no bank will finance the buyer? How much money in lost interests and mortgage payments have you sunk into the flat, and whatever price you can sell it for, will it even recoup this? Of course, who can forget the $400 million withdrawn by departing PRs every year.
3) It turns out that the CPF spends $1.4 million a year on “publicity and campaigns”, and yet , most Singaporeans are still in the dark as to how the CPF invests their money, why the rates are what they are, etc. This $1.4 million is a waste of money as far as I can see.
4) CPF is set up as a trust. They are the trustee, you are the settlor of the trust, and the only beneficiary while you are alive. You are asked to nominate another beneficiary in the event that you pass away. As the settlor of the trust, I would think that we have the right to ask the trustee how and where your money is being invested.
5) CPF spends $4 million on “staff welfare and training””. Not included is staff loans totaling another $69,000. Not sure who gets a staff loan, nor why.
6) CPF holds a total of $491 million in corporate bonds (yes, corporate, not the Singapore govt. bonds), some of which are AA rated, some are A rated, and $218 million are not rated!!. In fact, CPF acknowledges in its financial statements that these corporate bonds are riskier, and this is a much different story than what some PAP MPs have the told the public of a risk free investments.
Other than investments in special issues of Singapore Government securities, the CPF is also exposed to credit risk that arises from investments in cash, fixed deposits and debt securities. Financial loss may materialise should the issuer default on the securities.
In the prior year, CPF only invested $36 million in unrated bonds. I find it very strange that a trustee of the public money would invest in an unrated corporate bond. I would say that maybe junk bonds are not rated?
7) An astounding $750 million worth of debt securities are in non Singapore currency, hence exposing the CPF to a currency risk and loss in light of the strengthened Singapore dollar. As well, $127 million are in equity securities investments that are in non Singapore dollars. This totals $877 million in foreign currency risk, most of which is in USD.
8) Key management received $5.7 million in salary.
The whole purpose of a retirement scheme is so that an individual can save a sum of money in the present while he/she is employed, so that this saved amount can be used to fund retirement expenses when they have no or a lower income. If someone sets aside a sum of money for retirement, but dips into it every month to pay for rent, or electricity bills, or car payments, than there is really no retirement fund available for this person when it comes time to retire. This is exactly what is happening with CPF. Individuals are allowed to dip into it for housing down payments, and then for monthly mortgage payments after that. That leaves them with little CPF money when they come towards their retirement. And what is worse, by imposing minimum sum requirements, even this smaller amount of CPF cannot be withdrawn unless the minimum sum met.
Bearing this in mind, here are some interesting facts from last CPF statements available in Dec 2012:
1) CPF contributions for 2012 was $24.7 billion, but withdrawals were $11.7 billion!! The withdrawal is about half of the contribution. How can you save for your retirement when you take out $5 out of every $10 you put in? But wait, you say, how can this be? The % of S’pore population over 65 is only 10%. How can they have so much CPF as to withdraw $11.7 billion a year?
2) Well, it turns out that $5.7 billion was withdrawn to fund HDB down payments and monthly mortgage payments, as well $2.3 billion was withdrawn to fund to private housing DP and payments. The serious issue here is that the PAP has deliberately overpriced the value of a flat by at least 300%, meaning that the savings have been siphoned off to pay for overpriced housing. Even worse, these flats are nothing more than 99 years pre-paid rent. Hence the $5.7 billion is going into the govt. with no benefit to the people. Some fools will say, wait, I can sell my flat for money and retire. Let me ask you if you stayed in your flat for 40 years, how much can sell it for, when no bank will finance the buyer? How much money in lost interests and mortgage payments have you sunk into the flat, and whatever price you can sell it for, will it even recoup this? Of course, who can forget the $400 million withdrawn by departing PRs every year.
3) It turns out that the CPF spends $1.4 million a year on “publicity and campaigns”, and yet , most Singaporeans are still in the dark as to how the CPF invests their money, why the rates are what they are, etc. This $1.4 million is a waste of money as far as I can see.
4) CPF is set up as a trust. They are the trustee, you are the settlor of the trust, and the only beneficiary while you are alive. You are asked to nominate another beneficiary in the event that you pass away. As the settlor of the trust, I would think that we have the right to ask the trustee how and where your money is being invested.
5) CPF spends $4 million on “staff welfare and training””. Not included is staff loans totaling another $69,000. Not sure who gets a staff loan, nor why.
6) CPF holds a total of $491 million in corporate bonds (yes, corporate, not the Singapore govt. bonds), some of which are AA rated, some are A rated, and $218 million are not rated!!. In fact, CPF acknowledges in its financial statements that these corporate bonds are riskier, and this is a much different story than what some PAP MPs have the told the public of a risk free investments.
Other than investments in special issues of Singapore Government securities, the CPF is also exposed to credit risk that arises from investments in cash, fixed deposits and debt securities. Financial loss may materialise should the issuer default on the securities.
In the prior year, CPF only invested $36 million in unrated bonds. I find it very strange that a trustee of the public money would invest in an unrated corporate bond. I would say that maybe junk bonds are not rated?
7) An astounding $750 million worth of debt securities are in non Singapore currency, hence exposing the CPF to a currency risk and loss in light of the strengthened Singapore dollar. As well, $127 million are in equity securities investments that are in non Singapore dollars. This totals $877 million in foreign currency risk, most of which is in USD.
8) Key management received $5.7 million in salary.
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