SAVINGS & EMPLOYEE RETIREMENT AND PREMIUM FUND (SAVER-PREMIUM FUND)
ANNUAL REPORT FOR
FINANCIAL YEAR 2017 SAVINGS AND EMPLOYEE RETIREMENT AND PREMIUM FUND (SAVER-PREMIUM FUND) ANNUAL REPORT FOR FINANCIAL YEAR 2017 (1 APRIL 2017 – 31 MARCH 2018)
CONTENTS
PAGE
1. CHAIRMAN’S STATEMENT i
2. MEMBERS OF THE SAVER-PREMIUM FUND ii BOARD OF TRUSTEES
3. OVERVIEW OF THE SAVER-PREMIUM FUND iv Background Investment Strategy
4. SAVER-PREMIUM FUND GOVERNANCE STRUCTURE vi
5. SAVER-PREMIUM FUND FINANCIAL SUMMARY vii Transfers From Defence Budget Withdrawals
6. DECLARATION OF SAVER-PREMIUM FUND DIVIDEND viii
7. INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF TRUSTEES FS1 OF THE SAVINGS AND EMPLOYEE RETIREMENT AND PREMIUM FUND (SAVER-PREMIUM FUND) FOR THE FINANCIAL YEAR ENDED 31 MARCH 2018
8. STATEMENT OF AFFAIRS AS AT 31 MARCH 2018 FS5
9. INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED FS6 31 MARCH 2018
10. STATEMENT OF CHANGES IN SAVER-PREMIUM FUND ACCOUNTS FS7 FOR THE YEAR ENDED 31 MARCH 2018 11. NOTES TO THE FINANCIAL STATEMENTS FS8
CHART 1: SAVER-Premium Fund Assets by Investment Asset Classes v
CHART 2: Governance Structure of SAVER-Premium Fund vi CHAIRMAN’S STATEMENT
Global equity markets posted positive returns amid strong corporate earnings growth and synchronised world economic recovery. Developed equity markets advanced as business-friendly tax reforms were passed in the U.S. while political risk eased in Europe. Meanwhile, emerging equity markets benefited from strengthening commodity prices and robust earnings from technology companies. Bond prices were modestly positive in view of the gradual tightening of monetary policy in U.S.
The broadening of economic growth beyond U.S. will continue to underpin global economic growth going forward. At the same time, market volatility could rise as the risk of rising protectionism and tighter monetary policies dent the optimistic outlook for corporate earnings.
The SAVER-Premium Fund Department and the Board of Trustees are keeping a close watch on the market conditions, and the Board of Trustees will guide the investments of the SAVER-Premium Fund to seek favourable returns.
Mr Neo Kian Hong Chairman, Board of Trustees, SAVER-Premium Fund
i MEMBERS OF THE SAVER-PREMIUM FUND BOARD OF TRUSTEES
The Savings and Employee Retirement and Premium Fund (SAVER-Premium Fund) Board of Trustees consists of up to 13 members. 6 of the members are statutory appointments. The other members are appointed by the Armed Forces Council from the financial and banking sectors. As at 31 March 2018, the members comprised:
Chairman : Mr Neo Kian Hong (appointed on 19 Jun 2017) Permanent Secretary (Defence Development) Ministry of Defence
Board Members : MG Melvyn Ong Su Kiat Chief of Defence Force Singapore Armed Forces
RADM Lew Chuen Hong (appointed on 16 Jun 2017) Chief of Navy Singapore Armed Forces
MG Mervyn Tan Wei Ming Chief of Air Force Singapore Armed Forces
BG Goh Si Hou (appointed on 21 Mar 2018) Chief of Army Singapore Armed Forces
Mr Adrian Chua Tsen Leong Deputy Secretary (Administration) Ministry of Defence
Mr Daniel Chan Choong Seng Managing Director DCG Capital Pte Ltd
Mr Richard Chan Hiang Ngee Partner (Head of Equities) Avanda Investment Management Pte Ltd
Ms Liew Tzu Mi Chief Investment Officer (Fixed Income) GIC Pte Ltd
ii Ms Jacqueline Loh Wai Yin Deputy Managing Director (Monetary Policy and Investment/Development & International/Fintech & Innovation) Monetary Authority of Singapore
Mr James Loh Sinn Yuk Managing Director JL Capital Pte Ltd
Mr Geoffrey Wong Ee Kay Managing Director UBS Global Asset Management (Singapore) Ltd
Secretary : Mr Ng Kin Yi (appointed on 1 Apr 2018) Director, Defence Finance Organisation Ministry of Defence
iii OVERVIEW OF THE SAVER-PREMIUM FUND
BACKGROUND
The SAVER Fund was established on 1 April 1998 by the Singapore Armed Forces (Amendment) Act 1998, when MINDEF took over the management of the accumulated pension moneys for SAF Officers from the Ministry of Finance, and administered it as a separate savings and retirement fund.
On 31 March 2000, MINDEF introduced the Premium Plan for SAF Warrant Officers and Specialists to replace the Contract, Full CPF and Pensionable schemes of service. The Premium Plan is specially designed to support the financial needs of the servicemen at different stages of their life and career.
With the introduction of the Premium Plan, the Savings and Employee Retirement Fund (SAVER Fund) was renamed the Savings and Employee Retirement and Premium Fund (SAVER-Premium Fund). The SAVER-Premium Fund is under the direction and control of the Armed Forces Council (AFC). The assets of the SAVER Plan and the Premium Plan are combined for co-investment and joint management, and the SAVER- Premium Fund Board of Trustees is appointed by the AFC to manage and administer the Fund. The SAVER-Premium Fund is held, managed and administered as a Government fund by MINDEF.
INVESTMENT STRATEGY
The Board of Trustees adopts a prudent approach to the investment and management of the SAVER-Premium Fund. The Board reviews the Fund asset allocation, and monitors the performance of the various investments made by the Fund at each Board meeting (held quarterly or more frequently when required). To allow members to better manage their benefits according to their own personal circumstances, financial needs and attitude to investment risk, Investment Choice was introduced in April 2005. Investment Choice gives members the option of choosing to invest their moneys in one of three distinct portfolios, Stable, Balanced and Dynamic, each with different risk-return characteristics.
iv The Fund’s asset allocation targets for these three portfolios are as follows:
Chart 1: SAVER-Premium Fund Assets by Investment Asset Classes
Quasi- Government Dynamic Bonds, 6% Cash, 4%
Global Bonds, 20% Global Equities, 70%
Balanced Cash, 6%
Quasi- Government Global Bonds, 22% Equities, 40% Global Bonds, 32%
Stable Global Bonds, 15%
Cash, 25%
Quasi- Government Bonds, 60%
v SAVER-PREMIUM FUND GOVERNANCE STRUCTURE
The SAVER-Premium Fund comes under the direction and control of the Armed Forces Council (AFC). The AFC makes regulations for the proper control and management of the Fund. The SAVER-Premium Fund Board of Trustees is appointed by the AFC to manage and administer the Fund. The Board of Trustees is assisted by the SAVER-Premium Fund Department (SFD), which serves as the executive and administrative arm of the Board of Trustees, and is responsible for carrying out the decisions of the Board.
Chart 2: Governance Structure of SAVER-Premium Fund
vi SAVER-PREMIUM FUND FINANCIAL SUMMARY
TRANSFERS FROM DEFENCE BUDGET
MINDEF contributes a monthly sum equal to a percentage of a member’s salary into the members’ accounts. In FY17, contributions of S$138.1 million were made from the Defence Budget.
WITHDRAWALS
A total of S$166.8 million was withdrawn from the SAVER-Premium Fund accounts in FY17. The breakdown of the withdrawals is shown in the Statement of Changes in SAVER-Premium Fund Accounts on page FS7 of this report.
vii DECLARATION OF SAVER-PREMIUM FUND DIVIDEND
In April 2018, the SAVER-Premium Fund Board of Trustees approved the following annual dividend rates for FY17:
Annual Dividend Rates1 Dynamic 5.84% Balanced 3.90% Stable 2.69%
Members get an annual dividend based on the Fund’s investment return after taking into account all administrative expenses. The dividend will be computed based on the individual member’s account balances over the financial year. The dividend will be credited into each member’s SAVER-Premium Fund accounts, e.g. the CPF Top-up Account, the Savings Account, the Retirement Account or the CARE Account, and shown in their statements.
1 Positive dividend means that members’ SP Fund accounts will be credited with a positive value, increasing their overall balance. Conversely, a negative dividend means that members’ accounts will be credited with a negative value, reducing their overall balance.
viii Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Audited financial statements
For the year ended 31 March 2018
Contents
Independent auditor’s report ...... 1
Audited financial statements
Statement of affairs ...... 5
Income and expenditure account ...... 6
Statement of changes in SAVER - Premium Fund accounts ...... 7
Notes to the financial statements ...... 8 Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Independent auditor’s report
The Board of Trustees of Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) (the “Fund’s trustees”)
Report on the audit of the financial statements
Opinion
We have audited the accompanying financial statements of Savings and Employee Retirement and Premium Fund (the “Fund”), which comprise the statement of affairs as at 31 March 2018 and the related income and expenditure account, and statement of changes in Saver-Premium Fund accounts for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the statement of affairs, statement of income and expenditure, and statement of changes in SAVER - Premium Fund accounts are prepared, in all material respects, in accordance with the provisions of the Singapore Armed Forces Act, Chapter 295, the Financial Procedure Act, Chapter 109 (collectively the “Acts”) and the cash receipts and disbursements basis of accounting as required by those Acts so as to show fairly the transactions of the Fund as at 31 March 2018 on that basis.
Basis of opinion
We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Fund in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter - Basis of accounting and restriction on distribution and use
We draw attention to Note 2.1 to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the Fund to meet the requirements for inclusion in the Government Financial Statements. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the Fund, the Ministry of Finance and the Auditor-General’s Office and should not be distributed to or used by parties other than the Fund, the Ministry of Finance or the Auditor-General’s Office. Our opinion is not modified in respect of this matter.
Other matter
The Fund will be preparing a separate set of financial statements for the year ended 31 March 2018 in accordance with Financial Reporting Standards in Singapore on which we will issue a separate auditor’s report to the Fund’s Board of Trustees on a later date.
- 1 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Independent auditor’s report
Other information
The Fund’s Board of Trustees is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibility of Board of Trustees for the financial statements
The Fund’s Board of Trustees are responsible for the preparation of these financial statements to show fairly the transactions of the Fund in accordance with the provisions of the Singapore Armed Forces Act, Chapter 295, the Financial Procedure Act, Chapter 109 (collectively the “Acts”) and the cash receipts and disbursements basis of accounting as required by those Acts and for such internal control as the Fund’s Board of Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Trustees are responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and the use of going concern basis of accounting for the financial statements unless the Fund’s Board of Trustees either intends to terminate the Fund or to cease operations, or has no realistic alternative but to do so.
The Board of Trustees’ responsibilities include overseeing the Fund’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- 2 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Independent auditor’s report
Auditor’s responsibilities for the audit of the financial statements (cont’d) x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. x Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Fund’s Board of Trustees. x Conclude on the appropriateness of Fund’s Board of Trustees use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Report on other legal and regulatory requirements
Opinion
In our opinion:
(a) the receipts, expenditure, investment of moneys of the Fund, and the acquisition and disposal of assets by the Board of Trustees from the moneys of the Fund during the year are, in all material respects, in accordance with the provisions of Sections 205A, 205B and 205C of the Singapore Armed Forces Act, Chapter 295 and the Singapore Armed Forces (SAVER- Premium Fund) Regulations, Reg. 18; and
(b) proper accounting and other records have been kept in respect of all transactions involving the Fund, including records of all assets purchased.
Basis for opinion
We conducted our audit in accordance with SSAs. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Compliance Audit section of our report. We are independent of the Fund in accordance with the ACRA Code together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Fund’s Board of Trustees’ compliance.
- 3 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Independent auditor’s report
Responsibilities of Board of Trustees for compliance with legal and regulatory requirements
The Fund’s Board of Trustees are responsible for ensuring that the receipts, expenditure, investment of moneys and the acquisition and disposal of assets, are in accordance with the provisions of Sections 205A, 205B and 205C of the Singapore Armed Forces Act, Chapter 295 and the Singapore Armed Forces (SAVER-Premium Fund) Regulations, Reg 18. This responsibility includes implementing accounting and internal controls as the Fund’s Board of Trustees determine are necessary to enable compliance with the provisions of Sections 205A, 205B and 205C of the Singapore Armed Forces Act, Chapter 295 and the Singapore Armed Forces (SAVER-Premium Fund) Regulations, Reg. 18.
Auditor’s responsibilities for the compliance audit
Our responsibility is to express an opinion on the Fund’s Board of Trustees’ compliance based on our audit of the financial statements. We planned and performed the compliance audit to obtain reasonable assurance about whether the receipts, expenditure, investment of moneys and the acquisition and disposal of assets, are in accordance with the provisions of Sections 205A, 205B and 205C of the Singapore Armed Forces Act, Chapter 295 and the Singapore Armed Forces (SAVER- Premium Fund) Regulations, Reg. 18.
Our compliance audit includes obtaining an understanding of the internal control relevant to the receipts, expenditure, investment of moneys and the acquisition and disposal of assets; and assessing the risks of material misstatement of the financial statements from non-compliance, if any, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Because of the inherent limitations in any accounting and internal control system, non-compliances may nevertheless occur and not be detected.
- 4 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Statement of affairs
As at 31 March 2018
Note 2018 2017 S$ S$
Contribution account - SAVER Retirement account 3 928,256,837 892,864,449 Savings account 3 98,408,080 93,657,815 CPF Top-Up account 3 137,987,901 127,379,330
1,164,652,818 1,113,901,594
Contribution account - Premium CARE account 3 404,776,154 398,058,307 CPF Top-Up account 3 177,253,319 167,398,439
582,029,473 565,456,746
Forfeiture account 3 1,456,943 743,542 Income and expenditure account 3 - –
Total Fund balance 1,748,139,234 1,680,101,882
Represented by: ASSETS Current assets Investments 4 1,570,782,777 1,489,716,425 Fixed deposits 5 151,489,637 167,047,974 Cash at bank 25,866,820 23,337,483
Net assets 1,748,139,234 1,680,101,882
For and on behalf of the Board of Trustees:
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
- 5 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Income and expenditure account
For the year ended 31 March 2018
Note 2018 2017 S$ S$
Revenue Investment income, net 6 102,665,017 81,727,279
Expenses Management fees 7 (3,348,431) (3,165,832) Administrative expenses (3,008,708) (2,966,717) Other (46,386) (41,319)
Total expenses (6,403,525) (6,173,868)
Net income before tax 96,261,492 75,553,411 Withholding tax expense 8 (277,728) (413,785)
Net income for the year 95,983,764 75,139,626
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
- 6 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Statement of changes in SAVER - Premium Fund accounts
For the year ended 31 March 2018
Contribution Account - SAVER Contribution Account - Premium Income and Retirement Savings CPF Top-up CARE CPF Top-up Forfeiture expenditure account account account account account account account Total S$ S$ S$ S$ S$ S$ S$ S$
At 1 April 2016 860,927,772 89,373,580 116,525,047 391,918,500 157,413,863 844,394 – 1,617,003,156 Contributions from Consolidated Fund and Pension Fund 83,318,266 13,816,909 12,625,325 12,590,333 10,645,587 (12,439,375) – 120,557,045 Withdrawals by members from Contribution Account (87,734,665) (14,563,742) (7,356,584) (26,652,688) (8,628,789) 12,338,523 – (132,597,945) Net income for the year – – – – – – 75,139,626 75,139,626 Transfer from Income and Expenditure Account 36,353,076 5,031,068 5,585,542 20,202,162 7,967,778 – (75,139,626) – Net receipts 31,936,677 4,284,235 10,854,283 6,139,807 9,984,576 (100,852) – 63,098,726
Balance at 31 March 2017 and at 1 April 2017 892,864,449 93,657,815 127,379,330 398,058,307 167,398,439 743,542 – 1,680,101,882 Contributions from Consolidated Fund and Pension Fund 86,490,286 14,081,658 13,135,713 13,216,396 11,207,543 (15,567,622) - 122,563,974 Withdrawals by members from Contribution Account (102,026,619) (14,834,340) (9,347,861) (30,139,999) (10,442,590) 16,281,023 - (150,510,386) Net income for the year ------95,983,764 95,983,764 Transfer from Income and Expenditure Account 50,928,721 5,502,947 6,820,719 23,641,450 9,089,927 - (95,983,764) - Net receipts 35,392,388 4,750,265 10,608,571 6,717,847 9,854,880 713,401 - 68,037,352
Balance at 31 March 2018 928,256,837 98,408,080 137,987,901 404,776,154 177,253,319 1,456,943 - 1,748,139,234
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
- 7 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
1. Domicile and activities
The Savings and Employee Retirement and Premium Fund (SAVER-Premium Fund) is a savings and retirement fund for Singapore Armed Forces (SAF) officers (the SAVER Plan) and the SAF Warrant Officers and Specialists (the Premium Plan). The SAVER and Premium Plans were established under the Singapore Armed Forces Act, Chapter 295 (2000 Revised Edition) (the “Act”), on 1 April 1998 and 31 March 2000, respectively.
The SAVER-Premium Fund is a defined contribution plan and the future benefits payable to members from the Contribution Account under the SAVER-Premium Fund are determined by the contributions paid by the Ministry of Defence (MINDEF), the operating efficiency and investment earnings of the Fund as well as the number of years of service of members.
The number of members covered by the SAVER-Premium Fund as at 31 March 2018 is 14,228 (2017: 14,236).
2. Summary of significant accounting policies
2.1 Basis of preparation
The financial statements have been prepared by the Fund’s trustees in accordance with the provisions of the Singapore Armed Forces Act, Chapter 295, the Financial Procedure Act, Chapter 109 and the cash receipts and disbursements basis of accounting as required by those Acts.
The Fund’s Board of Trustees are responsible for the preparation of these financial statements in accordance with the provisions of the Singapore Armed Forces Act, Chapter 295, the Financial Procedure Act, Chapter 109 and the cash receipts and disbursements basis of accounting as required by those Acts. The Fund’s Board of Trustees are also responsible for ensuring that the receipts, expenditure, investment of monies and the acquisition and disposal of assets are in accordance with the provisions of Section 205A, 205B and 205C of the Singapore Armed Forces Act, Chapter 295 and the Singapore Armed Forces (SAVER-Premium Fund) Regulations, Reg 18. The financial statements are prepared to assist the Fund to meet the requirements for inclusion in the Government Financial Statements. As a result, the financial statements may not be suitable for another purpose. The audit report is solely for the Fund, the Ministry of Finance and the Auditor- General’s Office and shall not be distributed to or used by parties other than the Fund, the Ministry of Finance and the Auditor-General’s Office.
On this basis, investments are stated at cost. Revenue is recognised when cash is received rather than when earned and expenditure is recognised when cash is paid is rather than when incurred. Accordingly, no assessment of impairment is made for investments. All contributions and withdrawals from the SAVER - Premium Fund Account are recognised when cash is received or paid respectively.
The accounting policies used by the SAVER - Premium Fund have been applied consistently to all periods presented in the financial statements.
- 8 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
2. Summary of significant accounting policies (cont’d)
2.2 Functional and foreign currency translation
The functional currency of the SAVER-Premium Fund is the Singapore dollar (“SGD” or “S$”). As revenue and expenses are primarily denominated in Singapore dollars, management is of the opinion that the Singapore dollar reflects the economic substance of the underlying events and circumstances relevant to the SAVER-Premium Fund.
Transactions denominated in foreign currencies are translated to the functional currency of the SAVER-Premium Fund at the exchange rate at the date of the transaction.
Realised foreign currency differences arising on settlement of transactions or balances denominated in foreign currencies are recognised in the income and expenditure account.
2.3 Investments
Investments are stated at cost. Gains or losses on sale of investments are determined as the difference between the net sale proceeds and the cost of investments and are recorded in the income and expenditure account as they arise.
3. SAVER-Premium Fund accounts
3.1 Contribution account - SAVER
The Contribution account of each member of the SAVER Plan consists of the following subsidiary accounts:
(a) Retirement account
The purpose of the Retirement account is to reward SAVER members for completing a full career with the SAF. For Combat Officers, MINDEF contributes to a member’s Retirement Account from the beginning of his first year of service with the SAF for a period stipulated in the SAVER Plan. For Non-Combat Officers, MINDEF contributes to a member’s Retirement Account from his seventh year of service with the SAF for a period stipulated in the SAVER Plan. The amount a member can receive from the Retirement Account depends on the age when he leaves the service.
(b) Savings account
The purpose of the Savings account is to build up savings during the members’ career with the SAF. MINDEF contributes to this account during the first ten years of a member’s service. The amount that can be withdrawn depends on the member’s period of service in the SAF.
- 9 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
3. SAVER-Premium Fund accounts (cont’d)
3.1 Contribution account - SAVER (cont’d)
(c) CPF Top-Up account
The purpose of the CPF Top-Up account is to ensure that the employers’ CPF contribution for members is equivalent to that of private sector employees. An amount equal to the difference between MINDEF’s CPF contribution and the amount a private sector employer would have contributed is paid into this account by MINDEF. The amount in this account will be transferred to the member’s CPF Account at the point of his departure from the SAF.
3.2 Contribution account - Premium
The Contribution account of each member of the Premium Plan consists of the following subsidiary accounts:
(a) CARE account
The purpose of the CARE account is to reward Premium members for completing a full career with the SAF. MINDEF contributes a lump sum to this account when the member completed the required number of reckonable service years. A member can only receive payment from this account on attaining the stipulated age and completed the required number of reckonable service years.
(b) CPF Top-Up account
The purpose of the CPF Top-Up account is to ensure that the employers’ CPF contribution for members is equivalent to that of private sector employees. An amount equal to the difference between MINDEF’s CPF contribution and the amount a private sector employer would have contributed is paid into this account by MINDEF. The amount in this account will be transferred to a member’s CPF account at the point of the member’s departure from the SAF and only if he leaves the SAF after 6 years of reckonable Premium service.
The amounts credited to the members’ Contribution Accounts are from transfers of funds from the Pension Fund established under the Pension Fund Act (Chapter 224A), monthly contributions and other amounts paid from the Consolidated Fund and transfers from the Forfeiture Account.
Consolidated Fund means the Consolidated Fund established by the Constitution of the Republic of Singapore. The Board of Trustees (pursuant to paragraph 12(4) of the Singapore Armed Forces (SAVER - Premium) Fund Regulations, Reg 18) may also declare dividends to members’ accounts out of net income and net unrealised profits of the SAVER-Premium Fund.
- 10 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
3. SAVER-Premium Fund accounts (cont’d)
3.3 Forfeiture account
The Forfeiture account receives monies unclaimed by members or forfeited under the SAVER Plan or the Premium Plan. Monies in the Forfeiture Account do not belong to the members of the SAVER-Premium Fund. This account can be used to offset against contributions required to be made by the SAVER Plan or the Premium Plan to members’ Contribution Accounts.
3.4 Income and expenditure account
This account is credited with realised investment income. Gain and losses on realisation of investments, dividends and interest received, investment expenses and administration expenses are also charged to this account. The net income in the Income and Expenditure Account are distributed yearly as dividend declared by the Board of Trustees to members’ respective contribution accounts, resulting in the balance in the Income and Expenditure Account being zero at the end of the financial year. Withdrawals are directly debited from the Contribution Accounts.
4. Investments
The investments are held by custodian bank, State Street Bank & Trust Company, and are primarily managed by external fund managers. The external fund managers (Global Equities and Bonds) are Acadian Asset Management, Colchester Global Investors, Goldman Sachs Asset Management, Harris Associates L.P., Janus Henderson Investors, Magellan Financial Group, Morgan Stanley Investment Management, Neuberger Berman, PIMCO Asia, Scout Investments, Inc, Skagen AS, Standard Life Aberdeen Asset Management, State Street Global Markets, TCW Asia, T.Rowe Price Global Investment Services and Wellington International Management Company. The investments managed in-house comprise of quoted bonds and money market deposits/placements.
- 11 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
4. Investments (cont’d)
The investments held by these fund managers are as follows:
2018 2017 S$ S$
Cost - Quoted equities 273,773,949 253,531,469 - Quoted fund units - equities 192,484,591 210,594,199 - Quoted bonds 493,376,891 489,741,405 - Quoted fund units - bonds 478,685,332 421,618,579 - Other investments 132,462,014 114,230,773
1,570,782,777 1,489,716,425
Market value - Quoted equities 315,892,211 305,073,163 - Quoted fund units - equities 268,474,950 264,165,409 - Quoted bonds 498,162,615 503,509,722 - Quoted fund units - bonds 528,131,955 501,680,128 - Other investments 129,723,685 115,907,259 - Derivative financial instruments (net) 4,152,047 1,044,780
The market values of the above investments are based on last traded price. except for forward currency contracts and cross currency swaps that are valued using a valuation technique with market observable inputs. The frequently applied valuation techniques include forward pricing and swap models, using present value calculations.
Other investments consist of margins placed for futures trades with a maturity of less than one year and fixed deposits with maturities of less than one year. The fund managers may enter into currency forwards, interest rate swaps, options and futures on behalf of the SAVER - Premium Fund for the purpose of hedging the foreign exchange or interest rate exposure arising from investments held or gaining cost effective exposure to a particular market.
5. Fixed deposits
These consist of fixed deposits placed with financial institutions which are regulated. As at 31 March 2018, an amount of S$15,242,017 (2017: S$21,425,248) is set aside for the SAVER Premium members who have exercised the “Choice for Capital Preservation” option.
- 12 - Savings and Employee Retirement and Premium Fund (SAVER - Premium Fund) Notes to the financial statements
For the year ended 31 March 2018
6. Investment income - net
2018 2017 S$ S$
Gain/(loss) on sale of investments - net - Quoted equities 21,605,344 10,239,984 - Quoted fund units - equities 6,413,623 12,602,689 - Quoted bonds 1,341,976 571,116 - Quoted fund units - bonds 21,693,105 4,315,929 - Other investments 18,822,452 22,389,202
69,876,500 50,118,920 Realised currency exchange gain - net 3,439,368 4,754,436 Dividend income 8,253,191 7,757,746 Interest income from bonds 19,161,696 17,635,316 Interest income from fixed deposits and other investments 1,956,967 1,453,832 Other (loss)/income (22,705) 7,029
102,665,017 81,727,279
7. Management fees
2018 2017 S$ S$
Custodian bank’s fees 685,536 694,266 Fund managers’ fees 2,305,762 2,312,136 Investment advisor’s fees 357,133 159,430
3,348,431 3,165,832
8. Withholding tax expense
2018 2017 S$ S$
Withholding tax on dividend and interest income 277,728 413,785
9. Authorisation of financial statements
The financial statements for the year ended 31 March 2018 were approved and authorised to issue by the Board of Trustees on 21 May 2018.
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