QUESTION NO 730

NOTICE PAPER NO. 238 OF 2016

FOR ORAL ANSWER

Date: For Parliament Sitting on 10 November 2016

Name and Constituency of Member of Parliament

Mr Saktiandi Supaat

Question:

To ask the Prime Minister (a) what has been the take-up rate for the Singapore Savings Bond since its launch in September 2015; (b) whether the Ministry is satisfied with the interest shown; and (c) what is the Ministry doing to reach out to the man in the street to explain the benefits of the bond

Answer by Mr Ong Ye Kung, Minister for Education (Higher Education & Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:

1   The Savings Bonds programme was to expand the range of low-cost investment options for individual investors. The safety and flexibility of Savings Bonds means they are well suited to those putting aside “rainy day” funds. Savings bonds can also form part of an investor’s portfolio, complementing other higher risk, higher return investments.

2   Since the launch of the programme in September 2015, around 35,000 individuals, from all age groups, have invested S$970 million into 14 Savings Bonds issues. MAS is encouraged by the take-up rate.

3   Notwithstanding, we think more can be done to raise public awareness and understanding of Savings Bonds. One of the common misperceptions is that investments in Savings Bonds are locked up for 10 years. Although Savings Bonds mature in 10 years, an investor can withdraw some or all of the money invested, with interest, in any given month without penalty. This feature compares favourably against fixed deposits.

4   I would reiterate that the fundamental driver of Savings Bonds is global bond yields. Over the past several months, Savings Bonds interest rates have declined due to lower global bond yields. When global interest rates normalize, we should likewise expect them to influence SGS and Savings Bonds interest rates.

5   Efforts are ongoing to generate public awareness and a better understanding of the safety and flexibility that Savings Bonds offer. MAS has been reaching out to the public through publicity campaigns and community outreach activities. In particular, MAS has been working with partners such as MoneySENSE, the Institute of Financial Literacy and grassroot organisations, to educate the public about Savings Bonds. Through these outreach efforts, we expect awareness and interest in Savings Bonds to grow over time.

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