TR EMERITUS

AND THE CPF CHARADE CONTINUES… After months and millions of words exchanged in personal conversations, articles in pixels and print, SMSes and tweets – even a lawsuit – suddenly, in just 48 hours, Singaporeans were treated to 3 new reports that suggest the CPF mountain is about to move one nanometre. Joint Responsibility For Old Age Income Security Ex-NMP Laurence Lien got the ball rolling with his opinion piece in the ST, 21 Jun, ‘Joint Responsibility For Old Age Income Security.’ The buzz appears to praise and cheer his suggestion for GIC to ‘pay out bonus returns periodically’. But netizens cannot be more than mistaken. Lien states clearly, ‘At first, it was not my intention to write about the Central Provident Fund (CPF). But I feel compelled to do so given the persistent lack of clarity about what the real issues are.’ And clarify he did, harking back to his stint as a MOF director to assure readers that, notwithstanding ‘the Official Secrets Act does not permit me to say any more than what is publicly known’, trust him. The GIC is not broke and returns achieved are within ‘benchmarked returns’. Still, more transparency to build trust ‘needs to be addressed’, he asserts. And, yes, the Minimum Sum goalposts have not shifted but, oh yes, he is ‘sure CPF members would welcome the Govt setting limits early and giving sufficient notice of future changes.’ Really? Has he been reading TRE articles and comments? Furthermore, he makes it clear that ‘The majority of CPF members should not be so focused on the Minimum Sum or on wresting control of it. They should instead look at total retirement planning in order to answer questions such as: How much money do they require for retirement? What is the potential shortfall? How much must come from personal savings? How much longer do they need to work?’ Hence, readers should not miss his key thrust, namely; ‘Income security in old age presents dilemmas and hard choices for policymakers everywhere, not just in Singapore. The sooner everybody - government and people - starts working together, with openness and cool heads, to address it today, the better off everyone will be in the future,’ he concludes. My sincere apologies to everyone who has invariably preferred to jump on Lien’s almost passing suggestion that the Govt ‘should be able to accumulate excess returns… over the long term and pay out bonus returns periodically’. As much as the next chap, I think Laurence is not your PAP MP but speaks his mind in Parliament. However, netizens gushing over what is but his tentative 5-word idea is to sell ourselves short on two counts. First, we MUST NOT lose sight of a potentially seminal event in citizens’ fight for justice in the CPF issue. I refer to TRE reader, Trust et al, who recently spotlighted Trust Laws that may give us as CPF fund owners our full legal right to ALL the full returns that have accrued from use of our trust funds by GIC over the years. Second, Lien‘s idea, if accepted, implicitly draws a line on the past and accept ‘periodical bonus’ at the pleasure of the govt henceforth. My fellow citizens, why should we deny ourselves of what might be rightfully ours from the past? Nope. Settle what’s owing (if, in fact, Trust Laws prove to be on our side) before we even discuss the new. Even if the courts should interpret the laws to our disadvantage, we should still fight on based on the apparent neglect of the CPF Board in allowing our hard-earned savings to be degraded instead of enabling ‘Singaporeans to have a secure retirement, through lifelong income, healthcare financing and home financing.’ The only income that is ‘lifelong’ for ALL CPFers must surely be ‘interest income’ for our funds that continues even when one is jobless or retired. MOM’s ‘Minimum Sum Among Aspects Under Review’ Both TODAY & ST reports give prominence to the review of the Minimum Sum, currently pegged to the CPI. In the face of complimentary remarks for Minister Tan CJ, I want to alert citizens of 2 salient observations. One, whilst the Minimum Sum is amongst the issues under contention, it is NOT the most important. Instead, it is the CPF interest rate and our right to withdraw our money at 55 that are the 2 life-&-death issues for the majority of citizens and that impacts EVERY CPFer here and now – not ten, twenty years hence. Therefore, be not misled as daft ones. Minimum Sum review is a diversionary, administrative flare. More interest payments and the option to cash out are our legal rights. Unfortunately and unbeknownst to many, MOM issued this to TODAY, “CLARIFICATION: The article earlier said that the Government is reviewing CPF interest rates. This is wrong. The Government is reviewing ways to better buffer the CPF against inflation and CPF interest rates is one of the ways currently used to guard against inflation. Two, I marvel at commentators’ words of approbation for Tan CJ. Is he not the one who took a year to study the problems PMEs above >40 faced and came up with the toothless FCF? Is he also not the one who called Singaporeans ‘bigots’ who object to the PIDCS event? My dear fellow citizens, watch what the man does, not what he says – or how he looks, or what he looks like he can do. That said, I do acknowledge that Brigadier-General Tan is a junior in the ranks amongst his cabinet colleagues and possess less space to manoeuvre. Private Pension Plans Option for CPF in Future As unlocking cash from and for asset-rich older citizens and relooking salary caps for CPF contribution are mere sideshows, the third and last item of interest is Finance Minister Tharman’s receptiveness to more investment options for CPFers. But is this a key issue? Or a diversionary one? Citizens should again note that our 2 most important outcries for justice, re CPF interest rate and withdrawal at 55 are completely omitted in the discussions. CONCLUSION Isn’t it strange that in a forum dedicated to discuss ‘CPF & Retirement Adequacy’, no questions were raised or discussed on the achievement or lack in the CPF mission in its 59thyear of existence? Is not evaluating how far and how far short CPF Board and members the logical starting point for the way forward? Regardless, citizens must not be fooled by what has been written or said by our supposedly neutral and respected non-political leaders and ministers. Remember their track record of deception and diversion. Remember to watch what they do, not what they say. Remember to stay the course, not to settle for the seemingly good, only to sacrifice the best for ourselves. 2cents * The author blogs at 2econdsight.  Read More →

Clarity, Once And For All: Temasek Holdings Did Invest Singaporeans’ CPF? by Leong Sze Hian and Roy Ngerng Yi Ling So, the golden question – did Temasek Holdings invest Singaporeans’ CPF? In June this year, the government finally admitted for the very first time ever that the GIC does invest Singaporeans' CPF. (Click to enlarge) But what about Temasek Holdings? In this article, let’s find out once and for all if Temasek Holdings has ever taken our CPF to invest. On Tuesday, at the IPS Forum on CPF and Retirement Adequacy, Roy Ngerng asked the Deputy Prime Minister and Finance Minister: Temasek Holdings has said that they do not invest our CPF, is it possible to know if in the past Temasek Holdings had invested our CPF? Because the GIC was only set up in 1981, so prior to 1981, how was the CPF used and otherwise was it invested in Temasek Holdings? The Deputy Prime Minister and Finance Minister replied: Did Temasek manage the CPF funds in the past? No. It has never managed CPF funds. Temasek started off with a set of assets which were transferred by the Government at time of inception. I don’t have the exact figure in my head – but about $400 million dollars worth of assets in the form of a set of companies. It has never received CPF monies to invest. What was the case in the early days, before we amended the constitution in 1992, is that CPF monies, which were invested in Special Singapore Government Securities (SSGS), could be used by the Government to finance infrastructure - such as road infrastructure, Singapore’s economic infrastructure and social infrastructure. Just like (other) Singapore Government Securities (SGS), the Government was allowed to use borrowings in addition to the revenues it got in its budget, to finance infrastructural investments. That was the old system. Well, exactly what "economic infrastructure and social infrastructure" investments is the government referring to? And we do seem to have the answer. According to a speech given by the Minister for Labour and Communications in 1982: CPF savings form a large portion of Singapore's savings. These savings are used for capital formation which means the construction of new factories, installation of new plant and equipment, expansion of infrastructure such as roads,' ports and telecommunications, the building of houses and so on. These facilities coupled with Singapore's economic and political stability have in turn attracted large amounts of investments each year. These again go into the setting up of more businesses, factories and enterprises. So, there you have it. Our CPF was used to invest in, among others, factories, ports and telecommunications, the building of houses and so on. So, who currently owns this? Let’s explore these in detail. CPF is Invested in the Temasek Holdings, via HDB According to the book, ‘Social Insecurity in the New Millennium’ by Linda Low and Aw Tar Choon, “the CPF became a de facto housing financier since the Housing and Development Board (HDB) was a heavy user of development funds”. It went on further to explain that, “In the initial years, before the government built up budgetary surpluses, it borrowed funds from the CPF for its development expenditure budget, one important user being the HDB.” Indeed, according to the Innovation Policies in Singapore, and Applicability to New Zealand report, it also reaffirmed that, “The single largest item in the 1961-64 State Development Plan, and hence indirect beneficiary of CPF funds, was housing,” and that in this “CPF-HDB nexus”, “The CPF financed Singapore’s public housing program (where) In the 1960s and 1970s, the HDB was the largest borrower from the government’s development fund.” Low and Aw also explained that, “The other way the CPF functions as a financing agent is when CPF members use their CPF savings to purchase HDB housing”. And how does this become problematic? You can see that the net flow in one year in this “CPF-HDB” nexus is that there is still a higher net inflow into HDB, where Singaporeans would lose more of our CPF into the HDB. Chart: Lessons from Singapore’s Central Provident Fund Take a look at how much has been withdrawn from our CPF for housing: (Click to enlarge) Chart: Housing and the CPF System Thus in short, it is clear that Singaporeans’ CPF is invested in the HDB. Now, why is this important? According to Surbana, “In July 2003, HDB’s Building and Development Division was corporatised as HDB Corporation Pte Ltd (HDBCorp) in a bid to export Singapore’s decades of urbanisation expertise and experience to other countries… A year later, the potential of HDB Corp was evident in its acquisition by Temasek Holdings, the Singapore Government’s investment vehicle and in 2005, the company was rebranded as Surbana Corporation Pte Ltd.” Also, “In April 2011, CapitaLand, one of the largest real estate developers in Singapore, acquired a 40% stake in Surbana, with the rest held by Temasek Holdings. Two years later, Surbana underwent a restructure and its township development arm, Surbana Land was integrated with CapitaLand China, leaving its consultancy as the core business for Surbana.” Today, Surbana calls itself “A Singapore MNC, Temasek-Linked company” and CapitaLand is one of the major investments of Temasek Holdings. By now, it would be clear to any reader that Singaporeans’ CPF was indeed invested in the HDB, which corporatised an arm, that was then absorbed into Temasek Holdings. So, is the CPF invested in Temasek Holdings? And when the HDB was corporatised and acquired by Temasek Holdings and CapitaLand, was Singaporeans’ CPF returned to Singaporeans, or were the earnings shared with Singaporeans? (Click to enlarge) In fact, this is so troubling that in 2009, it was reported in The Business Times, in the article, ‘Shouldn’t HDB deal be on commercial basis?’, that, “The sale of HDB Corp to Temasek Holdings has already begged several questions in the business community. Why was there no tender and no transparency on the transaction price? And why Temasek?” It added that, “While neither is a publicly listed company – so there is no mandatory requirement to disclose price details – the lack of disclosure runs counter, at least in spirit, to the growing emphasis on corporate governance.” The Business Times reported that “So in effect, it’s a left to right hand deal – a reshuffling of assets and holding companies by the government,” and Leong Sze Hian had “said in a letter to BT that he is ‘puzzled’ by HDB’s explanation that calling a tender for the sale could have disrupted services to HDB residents subsequently.” Finally, The Business Times emphasised that, “Nor do we know just how good a deal HDB Corp got from Temasek. And it seems reasonable to ask: would not a more equitable price have been achieved if there was a tender?” And more importantly, how were Singaporeans compensated with our CPF? CPF is Invested in the Temasek Holdings, via POSB Apparently, this lack of openness in the “left to right hand deal” was not the first time it happened in 2009. According to The Business Times, “In 1998, POSBank was sold to DBS Bank, another Temasek-linked company, making DBS the largest bank in Singapore. Two years on, DBS sold its stake in DBS Land to Pidemco Land, also a government-linked company, to create property giant CapitaLand. Again, no other suitors were reportedly allowed.” Today, DBS is one of the major investments of the Temasek Holdings. Perhaps what would be revealing is from the book, ‘Housing a Healthy, Educated and Wealthy Nation through the CPF’ by Linda Low and T. C. Aw, the CPF funds were liberalised for investment after 1973/74. And so, “Having liberalized CPF for investment, the government seized on the opportunity to link (and tap) the large pool of CPF balances with the privatization of its government-linked companies (GLCs), beginning with the statutory boards. The privatization exercise was part of public sector reform, where the government began to scale back its activities in the economy after 1985, to make the private sector the engine of growth. Since the 1985 recession, a conscious recycling of CPF funds to avert possible “crowding-out” effects overall has been more distinct. Thus, in 1993, when Singapore Telecom was privatized through public flotation, there was a jump in CPF funds withdrawn.” CPF is Invested in the Temasek Holdings, via Singtel Thus according to Singtel: In October 1993, SingTel became a public company. Shares were traded for the first time on the Stock Exchange of Singapore (now known as the Singapore Exchange or SGX) on 1 November 1993. The IPO in 1993 represented 11 per cent of SingTel shares, with the rest held by Temasek Holdings... Singapore Citizens were able to purchase Group A shares (via using our CPF) at a discounted price as part of the Singapore Government's effort to share the nation’s wealth and to enlarge the base of share-owning Singaporeans. In 1996, Temasek Holdings offered a second tranche of SingTel shares (ST-2) to Singaporeans at a discounted price, reducing its shareholding in SingTel to about 82 per cent. The National Library Board further reported that: In October 1993, SingTel announced its Initial Public Offering (IPO). The government, through state investment company Temasek Holdings, initially offered 1.1 billion shares for sale to Singaporeans, with a series of discounts and loyalty bonuses. This issue was subscribed by 4.1 times, and Temasek added another 587 million shares to help meet demand. After the float, the government still held around 89% of SingTel through Temasek. On 1 November, SingTel debuted on the Stock Exchange of Singapore, with more than 1.4 million Singaporeans and foreign and local institutions acquiring shares in the company. With a share capital of 15.25 billion shares and a market capitalisation of S$60 billion at the time, SingTel became the largest company on the Exchange. Further tranches of SingTel shares were released for public sale in subsequent years, including 804 million shares in 1996. According to the CPF Board Annual Report in 2004, “Singaporean CPF members were able to buy discounted SingTel shares in 1993 (ST “A” shares) and 1996 (ST2 shares). SingTel declared a final dividend of 6.4 cents a share for its financial year ended 31 March 2004.” The CPF Board also explained that, “SingTel had performed capital reduction on 1 September 2004 and 1 September 2006. In the 2004 capital reduction, SingTel had cancelled 1 in every 14 of its shares, with the resultant shareholding rounded-up to the nearest 10 shares, where applicable. SingTel had reimbursed you a cash distribution of S$2.36 for each cancelled share. In the 2006 capital reduction, SingTel had cancelled 1 in every 20 of its shares, with the resultant shareholding rounded-up to the nearest 10 shares, where applicable. SingTel had reimbursed you a cash distribution of $2.74 for each cancelled share. The cash distributions were credited into your CPF Ordinary Account and a letter was also sent to inform you of the capital reduction in September 2004 and September 2006 respectively.” Where Singaporeans had bought Singtel shares with our CPF at $1.90, we were only reimbursed with cash distributions of $2.36 in 2004 and $2.74 in 2006. (Note: Was the initial public offering price of $3.61 for Singtel, arguably so overpriced that it took about 20 years for the price to to go above $3.61 (after accounting for the capital reduction in 2004 and 2006), after the initial surge in the price in 1993?) Perhaps the issue cannot be more simply put when Linda Low explained that the CPF investment scheme “assist(ed) with the government privatization program, as, for example, in the case of Singapore Telecom, which was privatized in 1993. A huge sum withdrawn from the CPF was invested into Singapore Telecom.” Is something wrong here? Were the interest earned on our CPF returned to Singaporeans? Today, Singtel is one of the major investments of Temasek Holdings. (Click to enlarge) CPF is Invested in the Temasek Holdings, via SBS Transit And this is not yet all! Low and Aw had also described how “On 26 April 1978, CPF members could start using their CPF savings for investment… (for) shares issued by Singapore Bus Service.” Later on, “Singapore Bus Service shares were renamed DelGro shares following the change in name of the bus company to DelGro Corporation.” In 2003, Delgro Corporation and Comfort Group merged to become ComfortDelgro, where SBS Transit became part of the group. At one time, “Temasek owns more than 50% of the shares in … SBS Transit." (Click to enlarge) CPF is Invested in the Temasek Holdings, via Government-Linked Companies But SBS Transit wasn’t the only transport company to be acquired by the Temasek Holdings. Leong Sze Hian wrote that, “Changi Airport Group (Singapore) Pte Ltd (CAG) was formed on 16 June 2009 and the corporatisation of Changi Airport followed on 1 July 2009,” where the airport was then “transferred to Temasek”. Leong Sze Hian also asked: In this connection, to what extent has the 1990′s corporatisation and transfer of state entities like SingPower and PSA, and the biggest single-year jncrease in its portfolio value with the listing of SingTel in 1993, contributed to its phenomenal 17 per cent annualised returns from Temasek’s inception? Who benefits from the transaction when a state entity is corporatised? If an entity is sold, what is the price? How do Singaporeans benefit? It may seem quite odd to debate and approve in Parliament the sale of a strategic state asset, like Chang Airport, when the price was still not known. Today, SATS and Singapore Airlines are also one of the major investments of  Temasek Holdings. At the start of the article, we also found out that the CPF was invested in port infrastructure. Today, PSA and Neptune Orient Lines are also major investments of  Temasek Holdings. The CPF was also invested in the construction of factories. Today, Mapletree is also one of the major investments of Temasek Holdings. Again, the question is, were Singaporeans reimbursed for the use of our CPF, and were the earnings on our CPF returned to Singaporeans? Exposed: The Government Did Take Singaporeans' CPF To Invest In The Temasek Holdings So, did Temasek Holdings invest our CPF, or only GIC? The issue is very clear now. What we have shown you is only a cross-section of how our CPF is actually invested in Temasek Holdings. But how many more? And most importantly, was our CPF monies returned back to Singaporeans? Or did we, in a sense, lose them to Temasek Holdings? Today, Temasek Holdings earns 16% in SGD terms since inception (1974). How much of their earnings is attributed to the CPF which has not been returned to Singaporeans? Are we facing another roundabout explanation from the government again as to how even though the CPF is indeed invested in the GIC, the government would want to claim otherwise, until forced without a choice to submit to admission once again? We now know that the CPF is indeed invested in the GIC, via a complicated routed process by the government, via government bonds and reserves. Doesn’t it look quite similar to you that the CPF is also invested in Temasek Holdings, via a similarly complicated routed process, via the government-linked companies, and what the Deputy Prime Minister and Finance Minister had described as economic and social infrastructural investments? (Click to enlarge) Since June, the government has finally admitted to many issues and questions. We finally know our CPF is invested in the GIC. But Temasek Holdings? – the government is still reluctant to explain the full workings and mechanics behind how our CPF is invested in Temasek Holdings. However, by doing our own investigations, we are able to know the information for ourselves. So, will the government admit to this as well? Or will they continue to not be transparent? Roy Ngerng * Author blogs at http://thehearttruths.com 3rd Edition Of The #ReturnOurCPF Event: Why Singaporeans Cannot Retire Because Of The HDB We cannot let up on our fight to demand to the government to be transparent and accountable to Singaporeans on what exactly they are doing with our CPF. The facts need to be known to Singaporeans. If today we cannot retire because we do not have enough in our CPF, we need to know the facts about what the government has been doing with it. On 23 August, there will be the third edition of the #ReturnOurCPF event. In the first edition on June 7, the speakers revealed to you the facts that the government has finally admitted to how they are using our CPF to invest in the GIC. In the second edition on 12 July, we exposed further information about the estimated number of Singaporeans who were not able to meet the CPF Minimum Sum. Join us at the third edition as we reveal even more glaring facts about how our CPF is being used by the HDB and for housing, and find out why Singaporeans are not able to retire adequately, because of the HDB. You can join the Facebook event page here. (Note: Also, Roy Ngerng’s first court case hearing will be held on 18 September 2014, at 10.00am. It will be a full-day hearing.) (Click to enlarge)    Read More →

I should be happy you've made a fortune on your house. But I'm not I should be grateful that conversations about house price rises belong to ordinary people with ordinary jobs and not the super-rich In New York, most new properties being built are priced at more than $3m, and flats routinely sell for $20m or above. Photo: Alamy (24 Jul, UK) - I loathe conversations about house prices. When people at dinner parties announce with mock astonishment how many hundreds of thousands they have made on their semi, I smile politely and think about how I can strike up conversation with someone else. It is not that they are boring. Instead, my chagrin is fuelled by ugly old envy. At the ripe old age of 34, I only just have a toe on the property ladder, and am filled with gnawing anxiety about the riches that could have been. But, grating though these conversations are, especially for those still renting, Britons should feel very glad they are able to have them at all. In London, you could safely assume that £10m would get you an extremely nice house in a very smart area. In Manhattan – a tiny patch of land whose watery perimeter forces buildings skywards – that sort of money only puts you in the market for an (admittedly plush) apartment. Only the super-rich get to play. Most new properties being built are priced at more than $3m, and flats routinely sell for $20m or above. They are spacious, of course, but we are not talking penthouses. Wall Street bankers pay even more for those, with sales easily topping $50m for top-floor apartments with helipads, so that they can zoom off to other homes in the Hamptons. Prices are also inflated by wealthy visitors from China and Indonesia, who come in tour groups with the express intention of snapping up prestigious properties. ... Angry San Franciscans stage regular protests against the change this tide of new wealth has wrought on their beloved city. It was little surprise, then, when the International Monetary Fund this week warned that although American households are growing wealthier, it is the richest 20pc who are making the lion’s share of the gains. The squeezed middle class find themselves falling further behind, while the percentage of Americans locked in poverty remains stubbornly at around 15pc. There is a lesson to be learned here. I shouldn’t cringe at the smug tales of those British friends who have bought at the right time and are coining it in. Instead, I should be grateful that these conversations belong to ordinary people with ordinary jobs – not just the top sliver.   More in: http://www.telegraph.co.uk/finance/personalfinance/houseprices/10989509/I-should-be-happy-youve-made-a-fortune-on-your-house.-But-Im-not.html  Read More →