Government's Assessment of GIC's 20-year Annualised Real Return of 3.4%

Mr Ang Wei Neng asked the Prime Minister and Minister for Finance (a) whether the Government is satisfied with the 20-year annualised real return of 3.4% by GIC for the period that ended on 31 March 2026; (b) whether there are current rules preventing GIC from adjusting its investment framework quickly in response to rapid market changes; and (c) how would the lower return impact funding for the Government's expenditure in the next few years.

The Government sets the investment mandate and its risk preference to guide GIC's overall investment approach. GIC has the flexibility to determine and adjust its investment strategy within the approved risk parameters, to respond to changing market conditions and achieve its investment mandate. In view of GIC's mandate and risk profile, its long-term investment performance is reasonable and within expectations.

GIC's recent returns would have limited impact on Government's expenditure. This is because the Net Investment Returns Contribution (NIRC) framework, which stipulates how the investment returns of the Reserves can be spent, is designed to ensure a steady and sustainable stream of income for the annual Budget. The Net Investment Returns (NIR), which is a component of the NIRC, is derived from the expected long-term real rate of return which the Reserves can sustain, and not the investment entities' year-on-year returns which can fluctuate due to market volatility.