Skip to main content

What if CPF Board files for bankruptcy?

[Individual lapses can happen in an organization despite safeguards and processes to prevent wrongdoing.]

Is it possible? What will be the consequence?

In business world, in investment and even a wrong purchase of property, one will get into trouble and face huge financial difficulties. So, noting is impossible, especially when you see a weaker and less credible leader taking over an important institution likes Temasek Holdings or gaps in internal control and staff competencies at National Research Foundation.

Why is it possible? CPF Board buys bonds from the government and in many ways these bonds are guaranteed by the government.  There is less concern about this link. But the next link about investment is a big concern to many Singaporeans and up till today, CPF members still worry about the CPF Board has no money to pay members.

Why? It is because of the investment and investment risk that the bond monies are being used and invested.  The government entrusts these monies to Temasek Holdings and GIC Pte Ltd to invest.   If they are unable to generate income and make punctual and due payments back to the government, the government will have to default the loans (bonds).

Of course, the government may use the huge foreign reserve to pay CPF Board under special circumstance but the use of reserve is subject to President’s second key.  Of course, the government can quietly use the reserve without informing the President. 

So, there is always a risk that the government may dishonour payments to CPF Board when all the bad timings plus all the bad and wrong investments come together. If you recall the collapse of Barings Bank in 1995:
"Barings' collapse was due to the unauthorised and ultimately catastrophic activities of, it appears, one individual (Leeson) that went undetected as a consequence of a failure of management and other internal controls of the most basic kind".

Comparing this with the above PMO’s statement on CPIB officer, does it look alike? Or, in the case of National Research Foundation, it is again the lack of internal control and staff competencies.

Detroit files for bankruptcy why not an institution

Detroit filing for bankruptcy protection is not a sudden event.  It is forecasted and expected due to the sharp drop in population.

(Reuters) - Detroit filed the largest municipal bankruptcy in U.S. history on Thursday, setting the stage for a costly court battle with creditors and opening a new chapter in the long struggle to revive the city that was the cradle of the American auto industry. The bankruptcy, if approved by a federal judge, would force Detroit's thousands of creditors into negotiations with the city's Emergency Manager Kevyn Orr to resolve an estimated $18.5 billion in debt that has crippled Michigan's largest city.

In fact, CPF Board may escape filing for bankruptcy if Singapore population is allowed to increase to 6.9 million. Under a big population background, the cash inflow contributed by new employees and young members will be bigger than the cash outflow of older members who reach withdrawal age or pass withdrawal age.  So, even the government defaults in loan payments temporarily, CPF Board still has sufficient cash flow to meet the withdrawal demand. 

Unfortunately, 6.9 million is a political issue which is bigger than the cash flow problem of CPF Board now.  It turns the possibility into impossible and advantages into disadvantages.

There are two impossibilities which under normal circumstance should not have happened. Firstly, it is the default of the government due to bad investment management and lack of internal control.  Secondly, without bigger and younger population, the CPF Board cannot raise enough funds internally to pay its members.     

CPF now faces a situation of no external cash flow from the government and no sufficient internal fund to pay members.

What are the consequences?
Under bankruptcy protection, cities, institutions or businesses will have an opportunity to renegotiate new terms and conditions for payments to creditors.  CPF members are the creditors and so full payments or temporary full payments are very unlikely because there are insufficient cash.

CPF Board can also request contributing members’ understand and help by raising the contribution rate to improve its cash positions.
However, it is a difficult option.  The government has always stressed that the current burdens should not be passed to the next generation.  Why should existing members help those old and retired members?  It is against the PAP’s philosophy.

The consequence of a collapse of CPF Board is unthinkable but it is no impossible.  It looks impossible but we cannot deny the risk.

Who can imagine Detroit will file for bankruptcy many years ago even they see the problems coming?

To turn the table around, to avoid CPF Board’s bankruptcy perhaps the best solution is the PAP government has to go or to be removed. 

CPF Board is the pillar of the PAP government.  If really one day CPF Board files for bankruptcy it also means the end of the PAP government. It looks so remote yet possible.

CPF monies, foreign reserve, Temasek Holdings, GIC etc. are all linked together.   Cases in CPIB, NRF, and the comments on lapses by Auditor-General all look impossible in the past but it still happens.  What are the meanings behind all these indications? 


Popular posts from this blog






行动党和李显龙总理,就是看准了,看透了新加坡人的心理,表明这是司法程序,在法庭、在法律上,行动党政府都不会被打败。那些敢于挑战法律的人,在新加坡的短短50多年的建国历史中,下场都是以悲剧结束。最近的一个例子, 就是新加坡最年轻的政治犯余澎杉在美国的遭遇。同样一个人,不同的国情,命运也不一样。
今年的总统选举,基本上已经是没戏看了。大家大约都可以估算到结局。反而是三、四年后的大选,存在变数。 行动党也了解,要重获2015大选的佳绩,在没有造神运动的条件下,似乎是不可能。因此,要维持一个高得票率,就必须出一些怪招。把非选区议员人数增加到12位,就是给人民一个小甜头。如果真的上当,新加坡就清一色没有非行动党的市镇理事会了。

李显龙的幻象:新加坡人对他的 dishonorable 行为无动于衷。

李显龙当然有焦虑,正如他的妹妹和弟弟对他的指责:Dishonorable son。李显龙害怕人们对他的诚信起疑心,因此,在国会搞了一个自辩。既然国会没有提出相关资料证明他的诚信有问题,那李显龙就是清白了。
李显龙的确有焦虑,但是,他却认为新加坡人很乖,很听话: 给你们什么总统候选人,你们就会认命接受; 想提告什么人,就提告,法律面前人人平等,没有人有意见; 给什么议长人选,国会就认命接受; 地铁误点误事,任何解释,人民都会接受; 无现金就是无限金,跟不上是你的错; 糖尿病就少吃白饭,多吃糙米饭;。。。。
这是一种李显龙独特的焦虑幻象。他很焦虑,自己无法做得比老爸好,甚至连吴作栋都不如。他也焦虑在后工业时代,新加坡无法创造高薪职位给年轻人;新加坡无法照顾贫穷老弱,无法为他们提供医药服务; 接班人无法胜任挑战; 新加坡人在无限金时代,成了乡下佬; 地铁和教育服务提不上来; 。。。
陈川仁自愿减薪出任国会议长,不论是升职还是降职,已经充分说明,他在国会外,在行动党的职业保护伞外,无法找到一份比国会议长,还要高薪水的工作。 这点显示他不如海军出身的吕德耀。吕德耀即使找不到高薪职位,也毅然离开内阁和国会。 陈川仁,为李显龙成川成仁,却也凸显接班人的素质问题和骨气问题。他们离开了行动党的大树,如何面对现实生活?李显龙能…