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#1
23-06-2014, 08:30 PM
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CPF members shortchanged by govt, misled by MSM
An honorable member of the Coffee Shop Has Just Posted the Following:
I refer to ST article “Can’t please all Fund members” and TRS article by Jeremy Chen. There are obvious half-truths in the ST article which Jeremy did not question. I will highlight ST’s half truths and Jeremy would do well not to simply regurgitate everything that he reads in future. DPM Tharman says “The government doesn’t need to borrow from the CPF…borrow..at lower rates than from the CPF. If we had issued one-year treasury bills, the rate we would have paid over the last 10 years would have been 1.7 per cent on average”. The government has said GIC invests for the long term and therefore requires long term funding. It is not prudent to borrow at short term rates and hope rates will stay low throughout, say, 10 years. The government did not know the rate would have been 1.7%, below the CPF rate, 10 years ago! When one requires long term funding for 30 years, say to buy a property, one does not borrow at 3 year intervals from to buy a financial institution. The above is an example of a half truth. Tharman then says “If we wanted to borrow through longer-term bonds, we could issue 10-year bonds and pay the market rate, without the plus one percentage point. CPF is actually expensive money for the government, not cheap money”. Since July 1999, 15 years ago, CPF contribution rate for the Ordinary Account (OA) has remained at 2.5%. The 10 year Singapore government bond (SGS) rate was 4.56% in 1999. From 1999 to 2013, SGS rate fell below the CPF rate of 2.5% in only 3 out of 15 years! (see table below) At 2.5%, CPF IS cheap money. To claim that CPF is “not cheap money” is not a half truth; it is non factual. CPF members have been misled into thinking the government has been taking care of us with the “plus one percentage point”. From the above table, it should be clear we have been shortchanged. How the government pulled this http://likedatosocanmeh.wordpress.co...nstream-media/ Click here to view the whole thread at www.sammyboy.com. 
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