'We never invested the CPF money in shares or bonds.
We always invested the CPF money in Singapore Government
bonds where the Singapore Government guarantees a fixed return
and you're always going to get it,' said Mr Lee, who is the GIC chairman.
"In other words, you will never lose. And if anybody thinks
he can do better, he's welcome to take his money and
go to a fund manager and try and do better"
What is the difference if your money returns 5.5%vs 3.5% a year ?
$100 at 3.5% over 40 yrs = $395
$100 at 5.5% over 40 yrs = $851
$100 at 7.5% over 40 yrs = $1800
$100 at 10% over 40 yrs = $4500
Just a 2% improvement of returns means that you retire with twice as much money ....if you're the Chilean govt which returned 11.8% since the inception of its national pension fund or Calpers, your retirees will have 10 times more than than another govt that gives a return of 3.5%. The long term rate of return is single most important factor when we talk about the success of a pension plan. A national pension fund simply cannot depend on how well a govt can persuade its people to put aside more and more money to be locked up at low returns....then convince them to work harder and longer using various state controlled media. A guaranteed low rate of return is a useless guarantee because of inflation, the buying power of money is not guaranteed. It becomes harder to swallow when you find that the money is loaned to a state owned enterprise that returns 9% per yr with that money and is not going to give much of it back to your pension account.
In a country where alternative views receive very little air time and the people's representatives are men and women who have learned to say 'yes' in a hundred different ways and see it as their mission to convince the people that whatever is done and changed is for their own good, you can always tell people what you're doing is the best that can be done...and for that you deserve your millions while the ordinary people fall back on their work ethics to see them through yet another few years of labor.
When the strain of labor makes it hard for the people to smile, you can always have another "Smile Campaign"...give out a few goodies close to elections, get the media to recap on the wonderful achievements since the last one and the people will appreciate that you have done a good job. The people can always be made happy if they are told only what is good for them.