I read with interest a casual blogger’s post titled “10 reasons why I do not trust GIC to manage my CPF savings”
To sum up, he alleges that GIC has lost money in one paragraph and several paragraphs later he alleges that GIC has made so much money and doesn’t dare disclose it. He thinks that it is not fair to use CPF member’s money to invest and even tries to use Minister Lim Swee Say’s quote that “many investments had been lost during the global financial crisis” to accuse GIC of losing massive amounts of money.
He’s very good at tearing down the system and questioning the right of using member’s funds, but I ask the good man – what does he propose should take over the job of GIC?
Everyone will agree that CPF funds should grow and give returns. So who should do this role? The good blogger would agree with me that it should be a financial institution, a fund manager.
Which bank is big enough to manage over a hundred billion dollars of funds? Clearly the good blogger will agree with me that it has to be a sovereign wealth fund manager.
Now, if it is a sovereign fund wealth manager – then this company would be constrained by the rules of business not to disclose what they buy, when they buy and when they exit. (If such a sovereign wealth fund manager agrees to do such a thing, he/she would cause the rapid destruction of the funds in no time – this is basic economics)
The blogger is making a non-argument, there are few logical outcomes should one choses not to trust the GIC.
The only other way this blogger could be right, is that we do away with the CPF system altogether. That way, no organisation needs to manage the funds and worry about making interest.
And oh by the way – the GIC does NOT invest CPF funds directly. What happens is, the Government takes CPF money, guarantees it with their life (just exaggerating here)… and then only can the GIC use this money for investment. The Government is the buffer between a risk taking GIC and a risk averse Singaporean public.
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