24 Oct 2011, 2.32PM
by REACH Administrator
Citing President Tony Tan’s assurance to press for greater transparency and accountability in the management of Singapore's sovereign wealth funds, made during his Presidential Election campaign, some contributors have written to REACH to seek clarification on CPF funds invested with the Temasek Holdings. As one contributor remarked, the total amount of CPF members’ balance, which stands at S$192 billion, is on par with the Temasek Holdings’ portfolio value. Here, we share with you the reply from Ministry of Finance, which was also posted on REACH’s Discussion Forum
on 12 Oct 2011, to close the loop with contributors.
MOF’s reply on 12 Oct
As of 31 March 2011, total CPF members’ balance stood at S$192 billion while Temasek’s portfolio value was S$193 billion. This is coincidental as CPF members’ balance is not related to Temasek’s portfolio value at all.
The CPF Board invests its members’ monies in risk-free Special Singapore Government Securities (SSGS), which are issued and guaranteed by the Singapore Government. CPF members receive market-based rates on their CPF monies, subject to a floor rate of 2.5% per annum. For example, for savings in the Ordinary Account (OA), CPF members receive an interest rate based on the 12-month fixed deposit and month-end savings rates of the major local banks.
There is no linkage between Temasek’s rate of return and the interest paid on CPF accounts.
As for Temasek, its portfolio includes shares in long-held companies like SingTel, SIA and PSA. These companies pay dividends to their shareholders, including Temasek. Temasek in turn invests received dividends in other companies which also contribute dividends, which are then re-invested again.
Temasek also divests its investments from time to time as part of its portfolio rebalancing and directs the proceeds to other investments. It may also choose to remain in cash instead of re-investing immediately, as part of its overall investment stance and its assessment of the market outlook over the short, medium and long term.
As an investment company, Temasek reports its portfolio value on an annual basis. You can assess its latest report here.
Quality Service Manager
Ministry of Finance