How Is Rate Of Return On CPF Calculated?

Source : The Straits Times, Sep 22, 2007

I HAVE been following the parliamentary debates on the CPF, especially the parts on the returns of the fund, with avid interest.

In response to questions about whether the Government was using CPF funds as a cheap fund base for investments, Manpower Minister Ng Eng Hen said no. He also emphasised that it was not realistic to expect the CPF rates of return to mirror the returns of Temasek and the Government of Singapore Investment Corporation in their investments. To illustrate, he used the example of us putting money in a bank. 'You put it there and you get 2 per cent. The bank publishes a report and says... it earned 8 per cent. You go to the bank and say, 'I want 8 per cent'. It doesn't work.'

I do not profess to know everything about the CPF. What I do know is that the CPF Board is no commercial bank. I have no choice but to put my money there. I am not informed of how my money is invested, and I cannot take the money out as and when I want to. I am not given credit facilities and anything I take out, I have to return with interest.

The CPF system works and I have no grouses about it. But what I would like to know is how the rate of return on my CPF is calculated and why is it that, with a stroke of the pen, I can now get one percentage point more than what I got before for my first $60,000.

Perhaps the Government could give a clear reply on this to lift the confusion.

Steve Tan Peng Hoe

$60,000 QUESTION

Why is it that I can now get one percentage point more than what I got before for my first $60,000?