Published: 04 November 2019
1. Mr Speaker, on behalf of the Minister for Home Affairs, I beg to move that the Bill be now read a second time.
2. The HUS Superannuation Act (“Act”) was enacted in October 2001 to establish a superannuation scheme, known as the INVEST Plan. This Plan is for officers in the uniformed services under the Ministry of Home Affairs (MHA).
3. These officers have an earlier retirement age of 55. They receive additional contributions under the INVEST Plan, on top of full CPF contributions, to help them with their career transition.
4. These additional contributions under the INVEST Plan are pooled to form an investment fund known as the INVEST Fund (“Fund”). The Fund invests in a diversified portfolio, managed by a Board of Trustees (“Board”) appointed by the Minister for Home Affairs.
5. The Board comprises senior members from the Home Team and members with relevant experience from the finance industry. Today, the Fund has approximately 14,000 members and S$1.5 billion of assets.
Impetus for Review
6. MHA has reviewed best practices in the investment management industry to achieve the Fund’s objectives of achieving appropriate risk-adjusted long-term returns and improving the management of the Fund.
7. The Bill proposes to make the necessary legislative amendments to align with industry best practices.
Key Clauses in Bill
8. The key provisions relate to the two main areas.
9. First, the broadening of the range of permissible investments. Currently, the Board is empowered to invest in “stocks, funds, securities and investments”.
10. Clause 5 of the Bill will expand the definition of investments in the Act for more effective management of the Fund.
11. One example is the use of derivatives to protect the value of the Fund and invest more cost-efficiently. This is consistent with industry practice. The use of derivatives will be guided by best practices, such as the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (MAS).
12. Second, the delegation of the Board’s powers and functions. Clause 6 of the Bill will clarify the scope of the Board’s powers and functions for efficient and effective governance and administration of the Fund.
13. The amendments will allow the Board to appoint investment managers to construct and manage the portfolio with multiple fund managers. This approach can help to achieve lower investment management fees through economies of scale that the investment managers would have.
14. The amendments for delegation are in line with industry practice for other large pension funds and are consistent with the powers of delegation found in other legislation.
15. The Board will maintain investment oversight of the Fund, and will have a clear governance framework and reporting structures in place. The Board remains fully accountable to the Minister for the management of the Fund.
16. In conclusion, the amendments to the Act will improve MHA’s management and governance of the Fund, for the benefit of our uniformed officers who are under the INVEST Plan.
17. Mr Speaker, I beg to move.