According to the latest directive announced by the CPF, the CPF interest rate for Ordinary Account (OA) will remain depressed at 2.5% per annum for the next quarter until Sep 30th. The announcement is issued by the CPF Board, whose fund is managed by the Monetary Authority of Singapore (MAS) which is under the Prime Minister’s Office (PMO). This is the 17th year the CPF OA rate is depressed at 2.5%.

Since Prime Minister Lee Hsien Loong took office in 2004, the CPF interest rate has been depressed at 2.5%. Many Singaporeans are however unaware that the two beneficiaries of low CPF interest rates are Lee Hsien Loong and his wife Ho Ching themselves, where the PM sits as the Chairman of sovereign wealth fund company GIC (a position he inherited from his father Lee Kuan Yew) and the wife as the CEO of the other sovereign wealth fund company Temasek Holdings. The powerful couple do not need to work as hard and generate higher returns so long they have access to cheap funds from the Monetary Authority of Singapore (MAS), which the PM oversees.

History of CPF

The CPF was created in 1955 by the former British colonial government as a cheap source of fund for the government to borrow and conduct post-war repairs and build public infrastructures. Interest rate under the British government was set at 2.5%, and was doubled to 5% when the British government relinquished authority and allowed Singapore to join Malaysia.

CPF interest rates under Lee Kuan Yew

Singapore’s first Prime Minister Lee Kuan Yew subsequently raised CPF interest rates to 6.5% – the highest ever in history – and many elderly Singaporeans were able to retire comfortably in the 1980s and 1990s. In 1999, due to the worsening economy from the Asian Financial Crisis, CPF rate was depressed to its lowest ever at 2.5%. The low interest rate stuck for a few years more due to the dotcom bust and SARS crisis.

However, the son of Lee Kuan Yew suddenly became addicted to the cheap fund CPF is offering and refused to increase the interest rate even when Singapore’s economy was doing well from 2005 onwards. Lee Hsein Loong also started new laws to increase the Minimum Sum (now called the Retirement Sum due to negative connotation), double the the Minimum Sum from S$80,000 in 2004  when he took office, to S$166,000 in 2017 today, and impose new restrictions on CPF Withdrawal Age, increasing it from 55 to 65 today.

In the past 14 years, the Prime Minister claimed there have been no suitable talent in the world to take over Ho Ching and Lee Hsien Loong’s positions in the sovereign wealth fund companies where they draw undisclosed remunerations. The dictator Prime Minister is however quick to jail and launch defamation lawsuits on his critics who dared questioned his blatant conflict of interests in handling the CPF funds.

Currently, about 90% of the Singaporean population is unable to meet the S$166,000 Minimum Sum and Singaporeans have only about 35% of the CPF Minimum Sum according to statistics released by the CPF Board in 2014 – the website has since been taken down. There is no statistics made available on CPF balances of Singaporeans to prevent any intelligent member of the public to calculate the affordability of retirement in Singapore.

Nonetheless, a government ministry recently revealed that elderly poverty jumped 74.32% between 2012 and 2015 – suggesting that at least 90% of the elderly Singaporeans are unable to retire relying solely on their CPF funds. In response to the lack of CPF funds to provide an adequate retirement in Singapore, the government called for Singaporean elderly to sell their HDB flats, downgrade or sell back part of the lease. The move effectively eliminated what little left of inheritance wealth of Singaporean elderly, and pass on poverty to their children.