We refer to the article “GIC reports annualised real return of 4.1%” (Channel NewsAsia, Aug 2).
4.1% real returns for 20 years looks low, but is meaningless relative to CPF rates?
It states that “GIC has reported a 20-year annualised real return of 4.1 per cent for the year ending in March 2014 – comparable to the 4 per cent achieved in the previous year.
These are returns on the foreign reserves of the Singapore government. The real rate of return is what is made over and above the inflation rate. In nominal USD terms, this translates into an average nominal return of 6.5 per cent over the same period.”
Hoping the report would answer questions?
With the recent ruckus on CPF, Singaporeans were waiting for the GIC’s report released today with much anticipation – hoping that the questions that Singaporeans have been asking may be answered.
However, the following questions are still left unanswered:
S$ return from inception?
What is the GIC’s nominal and real returns from inception in S$ and US$?
Comment: This would tell us how much is the excess returns kept by the Government from the interest rates paid on our CPF funds.
Why selective disclosure of S$ returns?
Why is it that the nominal and real returns for 20, 10 and 5 years are only given in US$ and not S$?
Has the 20-year return improved?
Since it was recently disclosed that the 20-year return in S$ was 5.2 per cent – has this figure improved for the current 20-year reporting period of the report?
Any other national pension does this?
Comment: Are there any national pension funds or sovereign wealth funds that do not also report their returns in the countries’ own currency?
The real returns in S$ which has been given now and in the past are for selective periods only. Why is this so?
No transparency and accountability?
Comment: Why do we still not have transparency and accountability for our CPF?
CPF members and taxpayers bear the risk?
Finally, the repetitious argument that the historical lowest real returns in the world of all national pension funds, is fair because the Government guarantees the returns, is nonsensical as no country does this, and the people ate bearing the risk of the CPF returns being so much lower than the actual returns, and the taxpayers bear the risk if the returns will ever be below the CPF rates.
Govt bears no risk, but keeps huge returns?
In other words, the Government bears no risk, but keeps the bulk of the excess returns, which belong to the CPF members.
S Y Lee and Leong Sze Hian
