PAP Economics 101

1. The CPF money is loaned to the Singapore Government in the form of Bonds...Singapore Government Bonds guaranteed by the Singapore Government (SG). No mention of the Bond interest rate. Surely we are entitled to know on what terms these bonds were issued, as CPF is our money.
2. The CPF money is not exposed to investment risks, as they are holding the SG bonds with fixed or variable rates of low return as Singapore interest rates have been low for a long time.
3. The Risks of these bonds ultimate depends on the Issuer i.e. the Singapore Government. So CPF will never go broke as the SG, the bond issuer, is unlikely to go broke. It may lose money, but while the cash flow is there, it will not go broke.
4. The SG in turn invests through GIC and Temasek Holdings. Win or lose, the SG will still pay the low bond interest to the CPF.
5. The system is perfect, and it can pay many generations of CPF money even if GIC and Temasek are investing badly.
6. It is better than a 'Ponzi' scheme as the SG can feed the bond holders (our CPF) with interest payments from the state revenue, even if GIC and TH are doing badly.
7. The whole scheme will only implode if :

• a) GIC and TH are losing more money than the CPF money coming in.
• b) The regular stream of CPF money stops for whatever reason, and the redemption of CPF increases for what ever reason.
• c) The Singapore Government defaults on the bond interest for whatever reason.

All highly unlikely in the Singapore context with stable government. Have a change in government, and you can all say Goodbye to your CPF.