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“Top up your children’s CPF instead of giving them hongbao. No risk, high return.”

Screams the headlines of state media Chinese papers Lian He Wan Bao in a propaganda fake news published yesterday (Jan 14). The state media fake news claimed that parents need not worry about giving their children hongbao for the coming Chinese New Year in February.

The Chinese papers featured a 49-year-old mother who works as a financial news editor, praising the CPF system for having “no risk” and “high returns”. The mother claimed that she deposited S$10,000 in her 13-year-old daughter’s CPF account as hongbao money. The mother who previously attended a propaganda talk held by CPF said:

“It is better than putting money in the bank account that gets so little interest rate return. Putting money in CPF is like putting money in a fixed deposit for long term savings.”

Due to bombardments of propaganda for decades, many Singaporeans are unaware that Singapore’s CPF savings is not risk-free and certainly not “high return”. The amount of CPF money depends on the financial performance of the country’s two sovereign wealth fund companies, Temasek Holdings and GIC. If Temasek Holdings and GIC repeatedly make losses, there will be no funds to return to CPF account holders.

As for “high return”, the CPF pays the lowest interest rate return when compared to other superannuation funds and government retirement funds in the world. The Malaysia’s EPF, where Singapore’s CPF originated from, reports interest rate returns beating the CPF every single year for the past 5 decades since inception. Moreover, EPF has a more flexible withdrawal rule compared to CPF.