Rebuttal to Roy, another reader speaks…



The HDB/CPF article by Roy sent a flurry of activity, and rebuttals. Here, another reader voices his disagreement.

Roy’s rant against HDB and CPF was spurious at best. If he feels that CPF is cheating him of his money and is a tax, then may he keep it there and never take out a cent for himself.

Here are my other thoughts:

Roy says: “You take your CPF money out to pay for a flat. And when you return, you pay interest back into CPF. You are paying interest on your own money. Pap is a bank lending you your own money.”

I say: This is a Smokescreen. CPF money has always been our own money. It is ultimately yours to use.

You can complain why govt is so paternalistic and refuse to let you draw up early to use, but cannot accuse the govt of stealing your money.

Why do you have to pay back with interest? Because CPF is a savings programme and it can only be withdrawn for investments. Buying a home is an investment. Buying shares too. So when these investments are sold, Govt would like you to put back the principle, plus whatever returns you earn, back into your savings.

Yet the CPF doesn’t know how much you earn, so it requires you to replenish based on CPF’s rates of 2.5%. Roy’s article says 2.5% and 4% are very low returns. So if you invest CPF monies well, then you should have no problem returning principle plus interest.


Roy says: “…with 2.5% interest on a mortgage, your interest payment is as high as the mortgage!” 

I say: Welcome to mathematics. This is called compounding interest.

Most bankers, insurance and mortgage sales people know this rule. 72 divide by interest rates, equals the number of years you double your money at that interest rate. So 72 divide by 2.5 is 29 years.

That’s how long you double your money at 2.5%. It is by the way, also the rate you double your money by putting it in CPF. So can Roy make up your mind. Is 2.5% too high or too low?


Roy says: “Singapore makes you pay very high pension rates, and with the lowest interest rates!”

I say: Roy is not comparing apples to apples. Our numbers include employer’s CPF contribution, conveniently added in.

In many other countries, workers pay it as a tax on their income. The tax goes to govt. The govt then pays a pension to those retired. The commonality of this system is that they are all bankrupt. Which means one day, many will retire with no pension because govt cannot pay. And they all know and it is a big political and social problem. Our case, pay into your own CPF account, with interest that trs cannot decide whether it is too high or too low, and withdraw at old age. Guaranteed.

Why other countries interest rate so high and so good?  Yes, wait til you take up a mortgage. At the enviable New Zealand interest rate of 14%, your mortgage amount doubles in 5 years.


Roy says: “your flat is worthless at the end of the lease.”

I say: We all die at the end of our lives. Our phones are worthless when new models come out.

Who promises eternity in anything?

But the lease of a home is not short – 99 years for most. It spans over 3-4 generations. For the first generation buyer, provided country does well, it is likely to appreciate throughout their lives. And you can pass the apartment on to the next generation… although they may have to see the lease run down and depreciate. But if this generation inherits it, then there is no mortgage. A reprieve before he/she sets up the next family (which is why the government is adamant about having every family owning their own property, and this has been the national priority since day 1)

Roy is incorrect on all fronts – mathematically and logically. It is an abuse of statistics and this is wrong. I would like to invite him to correct me where I am incorrect.






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