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CPF : Malaysia’s EPF 4 vs Singapore’s CPF 0


For those keen to better understand CPF performance and how your hard-earned cash has actually been working for you in preparation of yr retirement, you can do no worse than compare what you read on Sgp MSM and what’s published at tremeritus.com.

I post this article by Chris K partly because I suggested to him to write a follow-up on his comparison between Norway’s GPF & Sgp’s CPF (<http://www.tremeritus.com/2014/06/15/norways-gpf-8-vs-singapores-cpf-0/&gt;). The idea is to reach out to fence-sitters and PAP supporters who are inclined to think that TRE is biased towards views that make the PAP look bad but ignores those comparisons where the PAP govt has a clear edge. Since many would believe, correctly I daresay, that Malaysia compares less well against Sgp, I suggested the M’sian EPF.

Nothing works to make better decision with honest adults than factual info from both ends of a divide.

My other motivation to post it here is to share my input via a comment I made in response to Chris article. You will read it after his ends.

After Norway has trashed Singapore 8-0 (some thought the score should be 9-0!) on the issue of Sovereign Wealth Fund transparency, the writer received several requests to look into how a less transparent SWF stacked up against our own. For this, the writer picked our close neighbour, Malaysia’s Employee Provident Fund (EPF) which, by itself is no model of transparency on the scale of Norway’s Government Pension Fund. Even so, Malaysia thumped Singapore by 4-0.

EPF is CPF-GIC-Temasek Combined

As a preamble, it is useful to note that EPF not only manages the provident fund like CPF but is also responsible for investing members’ funds both domestically and internationally like GIC and Temasek. As such, there is no equivalent of the Special Singapore Government Securities which stands in the way of transparency and of CPF members getting a return that is not dictated by politics. By its construct, the EPF already beats CPF. Let us see how EPF stacked up against GIC and Temasek.

Snapshot of EPF’s Key Numbers

EPF’s 2013 Annual Report contains more information on its investments than GIC, and Temasek. First, let us look at EPF’s market value which includes invested funds, new monies and retained earnings (Annual Report which shows the last 5 years return can be download back to 2001).

Next, the annual returns and dividend payouts over the past 5 years are provided below.

2009 2010 2011 2012 2013 Ave
Return on Investment 4.88 6.08 6.58 6.87 6.97 6.28
Dividend Rate 5.65 5.80 6.00 6.15 6.35 5.99

It can be seen that EPF’s payout to its members is close to its rate of return on investments. The writer surmised that EPF is prudent to retain some of its returns in its general reserves to mitigate against potential losses. GIC’s 5 year return in US$ terms at 2.6% or estimated 0.6% in local currency terms and Temasek’s 3% in local currency terms compares poorly to EPF’s 5-year return of 6.28% in its own local currency terms. As noted in the Norway 8 Singapore 0 article, GIC does not disclose its total market value. Neither does GIC disclose its annual rate of return except for rolling 5, 10 and 20-year rates. Temasek does not have annual rate of returns earlier than 5 years ago. It should also be noted that EPF’s growth in market value should be driven largely by members’ monies because most of its returns are paid out in dividends.

Other Useful Information

The EPF provides the following information that neither GIC nor Temasek provide.

  • Top 30 risk exposure (all Malaysian companies), not as good as the GPF.
  • Its operating expenses which include the entire infrastructure of EPF, not just its investment fees, equal to 0.21% for 2013, averaging just 0.18% for the 5 year period.
  • It is clearly stated in its governance report that MYR 1,317,600 is paid to the Board and Investment Panel members and MYR 2,781,105 is paid to its Chief and Deputy Chief Executive Officers.

A Pertinent Question

Under its current investment mandate, the EPF can only invest 23% of its funds outside of Malaysia. Its domestic portfolio comprises equities, bonds, loans, deposits and properties. It is subject to less foreign exchange risk than GIC which has nearly all its assets invested overseas. Surely, there is a dichotomy between citizen’s retirement funding being in S$ and GIC’s returns being in foreign currencies which put CPF funds at risk to foreign exchange loss caused by the MAS’ exchange rate policy.  One would expect at least a proportion of its assets ought to be domestic.  But the valuable S$ GLC assets are in Temasek which states that it does not manage CPF monies. Should not the GLC assets be under GIC instead, to reduce the foreign exchange risk of CPF funds, or is the government keeping its most valuable assets to itself?  It is not difficult even for a layman to see the contradictions running through the entire CPF-GIC-Temasek set up, make even more contradictory by the MAS policy which produces a negative effect on overseas investment income.


The EPF is admittedly a different animal but the writer finds little to fault its set up in comparison to the multiple layers in Singapore. The point should already be made that although the EPF is no Norwegian GPF, it is still 4 goals to zero to Malaysia. In purely local context, Malaysia “boleh”, Singapore “tak boleh”.

Chris K


May I add the following observations;

– To make it obvious, how much the Board of Directors @ GIC & TH decide on paying the CEOs who, in turn, decide on the salaries and bonuses of the fund mgrs are all ONE BIG BLACK HOLE to CPFers whose funds are channeled by fiat to GIC and as citizens with moral if indirect legal claim to our nation’s wealth being handed out to TH to play with.

To belabour the abv point, if 5-year EPF’s mgt cost averages 0.18% and if according to GIC & TH preferred approach of ‘benchmarking against best practices’ we can reasonably guess that the mgt fee would then be in the ballpark figure of at least 1% (what’s Blackstone’s rate, anyone, to compare like-4-like given both’s int’l exposure if not fund size?)

Which means CPF paid 5.556X EPF mgt fees. Is it not EPF 5, CPF 0? May I introduce a different score system to better reflect GIC/TH’s own egregious, selective benchmarking of their own actions (commercial vs SWF)? Make that EPF 4, CPF -1.

– A 2nd observation on the investment choice. Diversification of risk via geog mkt, sectors, instruments etc is an accepted approach. However, would not the basic aim remain constant? Maximisation of returns for shareholders (oh, it’s the govt who is the only shareholder…that’s another self-serving, legal protective armour plate) commensurate with GIC/TH’s profiled risk levels.


Does that not mean tt one should ‘invest’ more in and where one’s strengths are fully exploited? Does tt not mean tt, it should be in line with the mission “To enable Singaporeans to have a secure retirement, through lifelong income, healthcare financing and home financing”?

As our CPF monies have obvsious been degraded and depreciated over the last decade or so vs inflation, have the fund mgers and, indeed, the govt tt allows for this govt-led, govt-sanctioned cheat-the-citizen scheme been called to account? Or have we been instead paying thro’ our nose for non-, negative performances?

Revised score EPF 4, CPF -2.

(PS: We all know who are those who sit in the respective Boards of Directors in GIC & TH. Let me be very, very clear, I am not alleging or implying corruption. But it is obvious that ‘NON-ACCOUNTABILITY’ & ‘MERITOGUANXI’ are 2 key insidious constructs.

Again, I do not apply the words here literally but figuratively, “Cesar’s wife must be above suspicion.” There is a simple solution to anyone who disagrees with my take here. Just ‘show us the money’ if you are so darn sure of your governance standard. Asking to just ‘trust us’ is no longer enough on evidence before us all.

If that is not taken up, it can only mean what Lee Kuan Yew presciently observed 25 years ago, “The moment key leaders are less than incorruptible, less than stern in demanding high standards, from that moment the structure of administrative integrity will weaken, and eventually crumble. S’pore can survive only if Ministers and senior officers are incorruptible and efficient.” – (then PM Lee Kuan Yew, 1979)


3 thoughts on “CPF : Malaysia’s EPF 4 vs Singapore’s CPF 0

  1. The author conveniently left out the Ringgit depreciation from parity to know 2.88 .. Ha.. Ha..

    180% discount factor after separation ! Only senile will CHRIS K illogical spin!


  2. I totally agree with Antony, the higher inflation rate in Malaysia in comparison to Singapore erodes any higher interest. This higher inflation is set to rise even further in Malaysia in 2016 which will basically wipe out any interest gains.


    • Hi, Robin. Thanks for commenting on a subject that remains relevant even though published/discussed in Jun 2014.

      To make your kind of assertion, you need to show us the inflation rates in each year vs the CPF/EFP return or dividend rate. A generalized statement on the comparative inflation rate in each country will not do.

      There should be such comparisons already done by some bloggers/analysts published. But I did a quick on for the period 2000-2014 using inflation info fr Indexmundi, EPF & CPF dividend rates history. I’m not able to show the table here but there results are:

      M’sia average annual inflation = 2.247%
      SG’s = 2.055%
      EPF average dividend = 5.443%
      CPF = 3.000% (Ordinary Account is actually only 2.5% but I estimate the average to be 3%
      overall after factoring in higher rates for Medshield/Retirement, Special
      Hence, EPFers get a net 3.196% return while CPFers get a net 0.945%.
      Therefore, on an apple-to-apple comparison, it’s clear who gets a better, much better deal.

      One observation that is true of many people who try to argue otherwise is their tendency to conflate the question of returns with other factors such as comparative currency exchange rates, prices of specific items, perceived quality of living etc. I think you and I can and must agree first on the ‘relevance’ of returns to the CPFer and his counterpart, the EPFer. That should mean returns that impact on his life, expenses etc – where he lives i.e. in SG & M’sia respectively. In short, given the comparative returns as already shown, the M’sian who continues to live his normal life enjoys a much better deal than his SG counterpart.

      You will disagree intuitively. But that is how objective comparisons need be done. Take another e.g.. Based on the mistaken line of argument about the strength of one’s currency impacting on the average person life. The Swiss franc has strengthened from about 1 CHF to 1 S$ in 2000 to about S$1.40 currently. Does that mean tt Singapore is now less well off than his Swiss counterpart and the latter better off than you are – based just on the strength of the franc?

      Back to you confident claim that “the higher inflation rate in Malaysia in comparison to Singapore erodes any higher interest. This higher inflation is set to rise even further in Malaysia in 2016 which will basically wipe out any interest gains” – the figures from 2000 to 2014 clearly shows tt your claim holds no water. I’m certain the results are similar if you stretch it further back to 1965 when SG left M’sia based on what historical documents now show (including LKY’s own cabinet letters); that PAP negotiated SG’s exit from and was NOT booted out as LKY’s crying and words implied and current PAP leaders just love to con’t to imply.

      Your thoughts now, based on what I have shown quantitatively?


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