Speech by Tan Kin Lian at Hong Lim Park on 7 June 2014, "Return Our CPF"

TKL 7 June 2014

1. When I accepted the invitation of the organizers to talk at this event a month ago, I expected a crowd of 100 to 200 people. Many things happened since. First, Prime Minister Lee sued Roy Ngerng for defamation over an article that he wrote on the CPF. Roy appealed for donations to his Legal Defense Fund. More than 1,000 people donated over $70,000 during the first four days.

2. I want to acknowledge the strong support, the overwhelming support, the enthusiastic support that you, the people of Singapore have given for the Legal Defense Fund of Roy You have given a clear signal to PM Lee about how you feel regarding the management of the CPF savings and his defamation action against Roy Ngerng. If there is any doubt about this support, just a look at the big turnout today.

3. The event today is called "Return Our CPF". What does this mean? Most people will say. "Give us back our total CPF money at 55. This was what you promised when you started the CPF. Keep to your promise. We are adults. We will know how to take care of the money".

4. I want you to be aware of two important points when you make this demand. When CPF was started more than 50 years ago, the retirement age was 55 and the life expectancy was 65 years. Today, the life expectancy has increased to 82, 17 years more. If people take out all of their CPF at 55, it cannot last for the rest of their life.

5. You should also be aware about what had happened to many people when they invested their CPF and other savings. Many of them are likely to be cheated or misled into bad investments. Do you remember Lehman Mini-Bonds and other investments that went bad during the global financial crisis? Do you remember how people invested in land banks and gold bars, and lost most or all of their money? The people who made the bad investments are not only those who are uneducated. They include well educated people!

6. While I ask you to be aware of the dangers, it does not mean that the current CPF system is good. On the contrary, it has many unsatisfactory features. When the minimum sum keeps increasing each year, more and more people cannot take out their money at age 55, or even at age 65. But they need some of the money to pay off their debts. What are these debts? Some people lost their jobs or had to spend money on expensive medical bills and education fees. When they have debts to pay, keeping the money away from them is not right. This is bad, and has to be changed.

7. What can be done? There is a petition making four demands to change the CPF.

a) The first demand is to pay higher interest rate on CPF savings, higher than 2.5% or 4%. This is a fair and sensible demand. CPF is long term savings and should not be invested in government bonds. They should be invested in shares and other investments that can give a return that is higher than inflation. Looking at the actual performance of good quality shares over the past years, the return payable on CPF should be 6% per annum, or higher, and not 4%.

b) The second demand is to allow the member to opt out of the minimum sum and CPF Life and to take out their savings at 55. I suggest that the CPF member be allowed to withdraw one-third of the savings at 55 and the remaining two-third at 65, if they wish to opt out of the CPF. However, I will still advice most people to keep most of their savings in the CPF to be withdrawn in installments. This is safer than trying to invest the money on your own. If CPF pays a higher interest rate, it should be the best investment for most people.

c) The third demand is to improve the transparency and accountability of the investment of Temasek Holdings and GIC. I support this demand as the money belongs to the people of Singapore. I am referring not only to the CPF money, but also for the reserves that are accumulated from past budget surpluses. It is a good practice for these sovereign wealth funds to be transparent and accountable, and to show that there is nothing to hide. The argument that this secrecy is necessary to protect the Singapore dollar is dubious and not credible. I do not believe this reasoning.

d) The final demand is to allow a higher monthly payout for people with inadequate savings. I agree with this demand, as each retiree needs to be an adequate monthly withdrawal, perhaps $800 a month. If they have insufficient savings, their savings will run out, but this is a separate problem. They need to have adequate money today, and not in the future.

8. Conclusion

Clearly, the current CPF system is unsatisfactory. Many people are unhappy. They have expressed it strongly in their support of the legal defense fund for Roy Ngerng, in the large attendance today, and in the social media. There are valid reasons for their unhappiness.

The government should recognize it. They cannot continue to be in their ivory tower.

They should form a review committee, comprising of a wider group of people, including some of the people attending this event, to study the four demands and to map out a plan to implement changes in stages over the next few years.

If they don't, they will get the strong message from the people in the next general election.

Tan Kin Lian