MPs offer ideas to improve CPF

[kagemusha]

^^ This was exactly what we talked about in the other thread. We have to adjust the returns by risk. Otherwise we will be naked when the tide goes out
http://www.valuebuddies.com/thread-5116-...l#pid82474

Why not allow CPF members to purchase Singapore Government Bond that offers more than existing CPF interest rate? Both are backed by Government but bond seems to offer higher rate? Maturity is not a concern, as you cannot draw out the money anyways.

Which tenor? Current SGS 1yr is 0.38% and 30 years is 3% yield

I believe a 20 years SGS bond would yield at least 3% when I last checked. CPF OA gives 2.5%.

[kagemusha]

Why not allow CPF members to purchase Singapore Government Bond that offers more than existing CPF interest rate? Both are backed by Government but bond seems to offer higher rate? Maturity is not a concern, as you cannot draw out the money anyways.

That's a good idea but cpf is acting like a government bank. HDB need money for development go borrow from cpf and pay back interest slightly abv what cpf paying for OA. I think gic temasek same thing if they need money issue iou.

If given the option everybody allowed to buy bonds directly without restriction then cpf becomes redundant and people will start to compare yields example the 10y sgs bonds is about 2.35% but other countries offering more then all the money will fly out of spore and they can't have that.

http://www.tradingeconomics.com/bonds

Would it not be the same? Bond $ would still go back to the coffers. It is a matter of the interest rate, that's all. After all, if SGS bond can offer 3% for long term (20-30 years), why CPF is not able to? At least for the OA side of things.

[sgd]

Why not allow CPF members to purchase Singapore Government Bond that offers more than existing CPF interest rate? Both are backed by Government but bond seems to offer higher rate? Maturity is not a concern, as you cannot draw out the money anyways.

That's a good idea but cpf is acting like a government bank. HDB need money for development go borrow from cpf and pay back interest slightly abv what cpf paying for OA. I think gic temasek same thing if they need money issue iou.

If given the option everybody allowed to buy bonds directly without restriction then cpf becomes redundant and people will start to compare yields example the 10y sgs bonds is about 2.35% but other countries offering more then all the money will fly out of spore and they can't have that.

http://www.tradingeconomics.com/bonds

Would it not be the same? Bond $ would still go back to the coffers. It is a matter of the interest rate, that's all. After all, if SGS bond can offer 3% for long term (20-30 years), why CPF is not able to? At least for the OA side of things.

To avoid controversy and avoid giving moderators a heart attack I will remove earlier & rephrase and just post the link most have cpf here can decide for themselves if or not they are getting fair returns on their money.

if cpf give you 3% means they have to lend somebody at 3.5% or more to pay you and keep themselves afloat. The more they give you the more expensive it is do borrow from cpf.

2.5% a year for 10 years is 25% return on interest alone. If lend for 20 year interest will be will be 50% of principal.

3.5% will be 70% interest payments in 20 year. Would they be able to invest and achieve similar stellar results or not.


http://app.mof.gov.sg/newsroom_details.a...8375966304

[AlphaQuant]

After all, if SGS bond can offer 3% for long term (20-30 years), why CPF is not able to? At least for the OA side of things.

I'm not sure I understand the logic.

The formula for CPF rates are:
1) OA = max(80% 12mth FD rates+ 20% major banks savings rate, 2.5%)
2) SA= max(10y SGS yield +1%, 4%)

So the CPF SA already offers you a rate that is a function of the SGS bond.

If you want to use OA to buy some bonds, you can just xfer the $ from OA to SA - you cannot withdraw the money anyway.

[Drizzt]

i have this point of view which i am not sure any would agree. i find the australia system of having a supplementary retirement fund that they can voluntary add to it with tax rebates a good bridging idea.

we are not looking for something forceful, rather a nudge towards the right direction. we already have something similar, which is the SRS.

the problem being the choice of products within the retirement fund itself. the main problem for the majority of the people is that they cannot evaluate financial products well. here is where i felt the goernment have a role to play. don't give people too much choices within. too much choice confuses and result in inaction.

if you limit the choices to the best products, then its difficult to have a situation where the people mismanaged it.

the rise of robo advisors in the usa such as wealth front, betterment, guards against behavioural issues and focus on a key determinate of result, which is cost.

Vanguard is already in singapore, but not offered to the public, we dont have the power, but the government have to engage them. why dont they do it.

[HitandRun]

My personal wish for CPF is this:

Govt do not have to pay me anything for my CPF OA. Just allow me to invest 100% in stocks, can liao... Please don't say STI ETF. I prefer to pick my own stocks.

[funman168]

I second it

My personal wish for CPF is this:

Govt do not have to pay me anything for my CPF OA. Just allow me to invest 100% in stocks, can liao... Please don't say STI ETF. I prefer to pick my own stocks.

[HitandRun]

if they are so confident of their ratings why need us to lend to them ask them try borrow from the giant squids who fleeced greece just 2 years ago they should able to get favorable rates since as you say bondholders view their credit risk as very low lah.

Ah ha! My favourite topic. But today a bit busy, meanwhile, can you study this balance sheet first? (cannot find the latest, only can see 2012. I suspect that it ain't very different):

Government's Balance Sheet

[CityFarmer]

Since sgd removed his previous moderated post, I removed all other related posts in this thread. The case closed

All views are welcomed, but there have to be responsible posts. If you want to make an accusation, you need to back it up with reasonable grounds or proven sources.

I agree CPF is not perfect, and more room for improvement, but NO anyhow "whack" here, please.

Thanks

Regards
Moderator

[sgd]

if they are so confident of their ratings why need us to lend to them ask them try borrow from the giant squids who fleeced greece just 2 years ago they should able to get favorable rates since as you say bondholders view their credit risk as very low lah.

Ah ha! My favourite topic. But today a bit busy, meanwhile, can you study this balance sheet first? (cannot find the latest, only can see 2012. I suspect that it ain't very different):

Government's Balance Sheet

oooo big scary numbers.

asset 765 bil
+cash 149 bil
+inv 615 bil

-liab 558 bil


asset to liab ratio is only 1.4 cash is 19% I see a lot of liabilities very little cash obviously I also dunno what is needed to finance a country but I also don't see a lot of buffer to me low risk is low debt at least 2-1 asset to debt and a lot of cash. so what made you conclude that it is low risk?