If GIC uses my CPF money to invest and makes 9% a year, why am I only paid a maximum of 6% a year?
First off, let's start with how our CPF monies flow to GIC.
We work and contribute a portion of our salary to our CPF accounts.The money in our CPF accounts is invested in the Special Singapore Government Securities (SSGS). The funds in SSGS are pooled together with other SG Govt securities, proceeds from land sales, and budget surplus, all deposited with the Monetary Authority of Singapore (MAS).MAS then invests the bulk of this money into GIC.Icon made by Freepik and Nikita Golubev from www.flaticon.com
SSGS is the securities that your CPF account are invested in and pays you that fixed CPF interest.
They are guaranteed by the Singapore Government.
So your CPF interest is actually paid to you by the Singapore Government.
So your CPF monies are not affected by GIC's investment performance (aka volatility).
Because...