Edited and republished from Roy Ngerng’s Facebook.

(In reference to Chris Kuan’s article ‘In political rhetoric Roy Ngerng conflates “reserves” with “CPF”.’) I did not make my point clearly enough (which I made in previous posts) – I do not agree with the complex funnelling of the CPF funds into SSGS bonds, and then into the reserves and the GIC/Temasek Holdings.

The funnelling removes the basic essence that the government is using CPF funds for GIC/Temasek’s investments no matter how they are funnelled – and as I put in my previous post, are borrowed CPF-invested bonds.

Why does this matter? Yes, the government might have made the complex funnelling legal and thereby removes the GIC’s and Temasek’s obligations to the CPF. But it is precisely because of this funnelling that has allowed the GIC and Temasek Holdings to become one of the richest sovereign wealth funds in the world while Singaporeans today have to face one of the least adequate retirement funds in the world.

As I have stated before, I believe that the CPF should be managed independently on its own. Yes, this will result in losses as has happened with Temasek’s losses last year. But if you look at Hong Kong’s example, from 2001 to 2010, in one year, Hong Kong’s EPF made a loss of 30% but in another year, it earned returns of 25%, and positive returns for the rest of the years as well.

The net effect is that Hong Kong’s EPF earned an average of 5.5%. This is higher than Singapore CPF’s 2.5% to 4%. Singapore’s CPF returns are “secure”, as the government puts it but it is low and therefore it does not provide “secure” retirement for Singaporeans. If put in the right hands and managed on its own, the CPF can earn higher returns. Last year, the average global returns are 6%.

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As Chris Kuan pointed out and which I have mentioned before, this is a question Singaporeans have to decide for themselves – would they prefer to continue with the current arrangement where the CPF is funnelled out of Singaporeans’ hands and where they only get fixed and low administrative interest rates, or would they prefer the CPF to be managed on its own, and face investment risks for higher returns?

And as I have constantly pointed out, this is why we need transparency so that Singaporeans can be the ones to make the collective and informed decision on how their own monies should be managed.

As it is, the current questions raised about the CPF is precisely because of the lack of trust that a segment of Singaporeans have towards the government’s management of the CPF. This distrust occurred because elderly Singaporeans are increasingly unable to retire on their CPF and the part of the CPF paid into Medisave/MediShield for healthcare can also no longer provide affordable healthcare for Singaporeans.

Therefore, we have to ask the fundamental questions – do we still want to follow the current arrangement where Singaporeans are unable to receive adequate returns on their CPF for retirement and healthcare? If the issue is other than the returns, should the government increase the CPF payouts and Medisave withdrawals to allow Singaporeans to access retirement and healthcare more sustainably and affordably?

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The government’s attempt of supplementing the CPF with a public pension of between S$100 to S$250 every month for the poorest 20% to 30% of Singaporeans is one small step in the right direction. But there has been many criticisms in that first, the supplementary retirement income does not cover all elderly Singaporeans and second, that the amount is too small and when coupled with the CPF payouts, is still not enough for retirement. Some studies have put S$500 a month as being a more reasonable supplementary retirement income.

Fundamentally, the lack of retirement adequacy therefore draws questions to the government’s funnelling of the CPF into GIC and Temasek, thereby reducing the returns on Singaporeans’ CPF.

Chris Kuan is right to point out that I do not qualify the technical definitions. I do not because first, yes, we can follow the technical definitions of what the CPF, bonds or reserves mean, but I do not accept these terms just as I do not accept the funnelling of the funds from the CPF to GIC/Temasek as they have been made without any democratic or transparent basis – in short, I do not accept the made-legality of this arrangement that has reduced the adequacy of Singaporeans’ CPF retirement funds and therefore I see no need to accept the technical definitions, on a philosophical level. Financial analysts can disagree but until we have a legal system that respectfully follows the will of the people in making legal agreements, I see no need as to why we should pander to legal terminology which is fundamentally flawed.

As it is, Singaporeans were no wiser of this complex funnelling arrangement until just after I was sued in 2014 when the government then admitted that yes, it has been funnelling the CPF into GIC, which then puts into question why the government has been denying this for the past 15 to 20 years prior? If so, what is there to be ashamed of if this funnelling arrangement is supposed to be “legal” unless the legality is made through dubious means?

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Second, this funnelling arrangement should be broken to enable higher retirement adequacy for Singaporeans. The legal definitions of bonds and reserves which distract from the conversation of how the CPF should be reformed and which therefore empowers the current funnelling system is what I do not agree with as well.

Yes, a matter of definitions and technicality some might argue – but my concern is about the philosophical and fundamental approach with which we need to address CPF retirement adequacy and how we need to break away from the current approach and re-envision how the reformed approach should be – this, my main concern.

Regardless, as I mentioned in the article and previously, it is up to you to make up your own mind about what a (new) solution should be or whether there needs to be one. But above which, transparency and freedom of information is necessary to allow us to come to informed decisions on our own.

This requires the CPF Board, GIC and Temasek to be fully transparent to Singaporeans on their management of Singaporeans’ monies as well as free press which would enable an open and truthful discussion.