Brad Bowyer, a member of the People’s Voice Party took his Facebook account on Tuesday (26 February) to question why Singapore’s Central Provident Fund (CPF) is giving lesser returns to retirees compared to other countries whose funds are much smaller than Singapore’s.
He revealed that the size of Singapore’s CPF fund as of Q3 was S$383.9 billion, which is equivalent to approximately US$284 billion, with 2 million active members and about 800,000 retirees. “We recently heard that the average return is a few hundred dollars for a maximum of 30 years. (Incidentally our CPF fund is the 8th largest “pension fund” in the world when looking at the OECD pension statistics report). At 37%, we have the highest contribution rate anywhere in the world,” he added.
In an attempt to understand what other countries with equivalent fund size are delivering to its citizen, Bowyer compared CPF with Germany’s pension fund. He wrote that Germany has a pension fund that is US$268 billion, which is slightly lesser than Singapore but has a population of 82.4 million of whom about 25% are above 65.
However, the European country still manages to pay an average of €1,175 or SGD$1,800 for life and aims to replace 50% of their previous income, which is supplemented by vocational and optional private schemes.
He also added that their contribution rate is only 18.7% and it’s split half (50/50) between employer and employee.
“My question, why can a slightly smaller fund return 5 to 6 times the amount of money to 10 times as many people in Germany compared to ours?” he asked.
In short, Bowyer noted that Germany’s pension system is 60 times more effective than Singapore’s.
Besides Germany, Bowyer also drew comparison with Denmark, which he said has one of the best pensions in the world.
He wrote, “Denmark has a population of 5.75 million, very similar to ours with about 18% or 1 million pensioners. Their pension fund is only US$160 billion. They have a 2-tier system, the first part is paid by tax revenue and the second part is vocational split 66/33 employee/employer averaging a 12% contribution rate. The combination of schemes aims to replace close to 100% of income for life and currently sits around 98.7% and an average SGD$4,000 per month.”
After delivering his arguments in his post, Bowyer wondered what has gone wrong with CPF’s system where other countries can outperform Singapore by so much more.
“There are serious and fundamental flaws in how our CPF funds are allocated, used and invested. If the incumbents will not address these issues, then we need to vote in a team that will,” he concluded.
However, after his post was uploaded, almost 100 comments were received whom TOC identify as fake accounts and Internet Brigades (IBs)* dismissed his arguments. They said that his comparisons of CPF with Germany and Denmark may not be so true after all.
Using similar links and narrative, some questioned if the pension scheme in Germany is sustainable.
However, there are still those who thanked Bowyer for his insights as they now have a better understanding of CPF and how they have been “fed misinformation for so long”.
*TOC has monitored the accounts for the last year or so and have a record of their comments to show organised activity.