SINGAPORE: Singapore's spending needs will increase over time, but that should not drive GIC and Temasek to take on more risks, Senior Minister of State for Finance Josephine Teo said on Friday during the Finance Ministry's Committee of Supply debate in Parliament.
Mrs Teo said the solution has to rest on the government's budgetary measures, and that both GIC and Temasek must continue to invest with the aim of achieving good, risk-adjusted returns over the long term.
She said that under the Net Investment Returns framework, the government can only spend up to 50 per cent of the long term expected real return from the net assets managed by GIC and the Monetary Authority of Singapore.
This means that half of the expected real returns are retained, ensuring that the reserves are not decumulated over time.
Mrs Teo was responding to a question on whether the net investment returns will be sufficient to prevent a decline in Singapore's reserves.
She said: "We have achieved good returns from the GIC over the long term. But over the short term, its exposure to global markets can mean that its returns fall short of what the government pays the CPF. The government takes the risk, not CPF members."
Addressing another question on whether giving higher CPF returns will be better than sharing benefits through government transfers, Mrs Teo said that the CPF system -- together with the government's fiscal transfers -- is a fair and equitable approach for citizens in the long run.
She added that the CPF system is designed to be sustainable, and is complemented with top-ups such Workfare, housing grants, and other schemes. - CNA/xq/gn
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