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GIC ‘needs to invest over long term’, cannot directly manage CPF

Noting that some grassroots leaders and others have questioned why the Government does not get the GIC to directly manage Central Provident Fund (CPF) monies, Deputy Prime Minister Tharman Shanmugaratnam explained yesterday that should the GIC do so, it will need a very conservative portfolio without the ability to invest over the long term and ride out market cycles.

Noting that some grassroots leaders and others have questioned why the Government does not get the GIC to directly manage Central Provident Fund (CPF) monies, Deputy Prime Minister Tharman Shanmugaratnam explained yesterday that should the GIC do so, it will need a very conservative portfolio without the ability to invest over the long term and ride out market cycles.

This is because the GIC would have to focus on ensuring that it is able to meet the Government’s full obligations on the CPF every year, said Mr Tharman, who is also Finance Minister.

The conservative portfolio the GIC would have to manage would not invest much in equities and certainly not in real estate, he added.

“It will aim to just minimise the chance of failure to meet obligations, not maximise long-term returns. That’s what would happen,” said Mr Tharman, who was responding to Workers’ Party chief Low Thia Khiang’s question on why he thought having CPF monies managed and invested as an independent pool would not result in the same returns as that the GIC is able to achieve.

Mr Tharman, who sits on the GIC board, said the GIC should do better than the CPF obligations over the long term.

This is because of its large diversified portfolio that pools proceeds from Special Singapore Government Securities — which CPF monies are invested into — together with unencumbered assets such as land sales proceeds, government surpluses and the investment returns on those funds. XUE JIANYUE

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