CPF monies are invested by the CPF Board (CPFB) in Special Singapore Government Securities (SSGS8) that are issued and guaranteed by the Singapore Government. This arrangement assures that the CPF Board will be able to pay its members all their monies when due, and the interest that it commits to pay on CPF accounts.
This is a solid guarantee. The Singapore Government is one of the few remaining triple-A credit-rated governments in the world. The proceeds from SSGS issuance are invested by the Government via MAS and GIC, just as it invests the proceeds from the market-based Singapore Government Securities (SGS).
No CPF monies go towards government spending. Government borrowings from SGS and SSGS, cannot be used to fund expenditures. Under the Government Securities Act (enacted in 1992), the monies raised from SGS and SSGS cannot be spent.
The proceeds from SSGS issuance are pooled with the rest of the Government’s funds, such as proceeds from issuing Singapore Government Securities (SGS) in the markets, government surpluses, as well as the receipts from land sales which under our Constitutional rules are accounted for as Past Reserves. The comingled funds are first deposited with MAS as government deposits. MAS converts these funds into foreign assets through the foreign exchange market. A major portion of these assets are of a long-term nature, such as those that provide backing for long-term Government liabilities like SSGS as well as unencumbered  assets such as government surpluses and land sales receipts. These assets are ultimately transferred to GIC to be managed over a long investment horizon.
The Government’s assets are therefore mainly managed by GIC. GIC is a fund manager, not an owner of the assets. It merely receives funds from Government for long-term management, without regard to the sources of Government funds, e.g. SGS, SSGS, government surpluses. The Government’s mandate to GIC is to manage the assets in a single pool, on an unencumbered basis, with the aim of achieving good long-term returns. The Government does not specify to GIC the sources of the assets that are placed with it. The Government also does not specify whether the assets are encumbered or unencumbered, nor state the proportions. (see Q28 for elaboration)
Prior to the formation of GIC, it was the MAS as central bank that managed these assets. The investment of the assets was in keeping with the traditional approach of central banks, with large allocations to liquid, low-risk instruments. After GIC was formed in 1981, the assets were progressively transferred from MAS to GIC for management. This was to enable the assets to be invested in higher risk instruments that could be expected to earn higher returns over the long term.
The SSGS proceeds have not been passed to Temasek for management. Temasek hence does not manage any CPF monies. Temasek manages its own assets, which have accrued mainly from proceeds from sale of its investments and reinvestments of dividends and other cash distributions it receives from its portfolio companies and other investments. Temasek also has its own borrowings and debt financing sources. The Government’s relationship with Temasek is that of its sole equity shareholder.
The information above elaborates on that provided at Q2.
[8] Special Singapore Government Securities (SSGS) are non-tradeable Government bonds issued to the CPF Board. The securities earn for the CPF Board a coupon rate that is pegged to CPF interest rates that members receive.